Watch out for foldable phones in the second half of the foldable Smartphone

 The IT sector is continuing its sluggish stock price trend amid concerns over a decline in global demand. It is natural that demand for IT products decreases when the economy worsens. Analysts say that the foldable market is in the early stages of blooming, and core parts stocks are worth paying attention to. It's better to put related stocks together and check them out. 

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Demand Peak-out Concern 

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Demand for IT sets is hard to be optimistic about. It is because of the high base of COVID-19 for two years. Already, the decline trend is clear in major set families. 

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- Smartphones, TVs, and tablets are clearly seeing a decline in demand. (3Q21 Peak-out)

 - Sales of laptops have also begun to decline. (1Q22 Peak-out) 

- Home appliances are also feared.(2Q22 Peak-out expected) / 

- Only the server is solid. 

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GOS controversy is also an obstacle to Samsung Electronics' Galaxy strategy, which was aiming to restore its market share. It is a negative factor for Korea's IT parts industry. It is also pessimistic that Galaxy has been giving up its market share to its competitors over the past two years. It is estimated that sales of sets in 2022 will decrease by 2-10% year-on-year, respectively. In an environment where demand prospects are uncertain, an investment strategy for selecting bottom-up stocks is needed. 

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Second half of 2022 – notice differentiated product lines, foldable 

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We had a tour meeting with 70 companies. Companies are considering uncertainties in the second half of the year, although the current situation is solid. It is cautious to expect a sharp rebound in demand in the second half of the year. Attention should be paid to industries/products/business groups that can be differentiated from the overall flow of IT demand. 

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I think the IT momentum that stands out the most in the second half is foldable. 

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① Even if IT is sluggish in 2022, the foldable industry will grow (more than +100% year-on-year).

② Orders for foldable parts from secondary parts manufacturers are increasing. Continuous upward revision of the consensus (recently compared to the end of the year) is expected. 

③ The benefits of the foldable will be concentrated on some parts manufacturers. 

④ Stock prices of companies with a high proportion of foldable companies in the company's operating profit will rise significantly. 

⑤ It pays attention to parts makers that can diversify their customers to Chinese companies. 

⑥ Foldable 'Display and Hinge' will be upgraded in 2023. Growth in 2023 and 2024, not this year's performance, should also be considered. 

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Investment strategy – to distinguish between good and bad parts such as foldable parts 

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Amid concerns over IT demand, it is not easy to find the top-down momentum of the parts/electronics industry. It is required to distinguish between good and bad stocks related to technological changes. Selectively, it is necessary to supply new items, increase market share, and discover corporate groups related to supply pharmaceutical products. 

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First, it points to foldable as momentum for technology change in the second half of the year. Fine Technics (106240), KH Batech (060720), Interflex (051370), and Segyeong Hi-Tech (148150) are recommended as foldable beneficiaries. Other items of interest are BH (090460) and Novatech 285490.

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