Korean smartphone parts makers' stocks rebound in July

South Korea’s smartphone parts makers' shares are showing signs of a rebound following a steady decline since early this year. China’s smartphone shipments, which increased in June, are driving investor expectations of a recovery in the mobile phone parts industry.

Shares of Samsung Electro-Mechanics Co., listed on Korea's main bourse Kospi, rose 9.58% from 127,500 won ($97.33) on July 1 to 143,000 won on July 22.

The electronic components maker within Samsung Group produces some core parts such as multilayer ceramic capacitors (MLCC), inductors, chip resistors, camera modules and substrates.  

Interflex Co. shares, listed on the secondary bourse Kosdaq, rose 9.02% from 11,950 won to 13,300 won during the same period.

The company supplies flexible printed circuit boards (FPCBs), modules, touch screen panels (TCPs) and automation equipment to global mobile phones including Samsung’s Galaxy smartphones.

Shares of image sensor module maker MCNex Co., listed on the Kospi, rose 4.65% from 30,800 won to 32,550 won over the same period.

The stocks are being boosted by an increase in China’s smartphone shipments. Monthly shipments in June totaled 27,478,000 units, up 9.1% from June 2021. It was the first year-on-year increase since January 2022.

The three Korean smartphone parts makers’ shares, which dropped 30%-40% from January to June this year, are expected to bounce back next month alongside increases in Galaxy smartphone production.

Samsung’s orders for Galaxy smartphone parts will trough during the May-July period and rebound in August-October, Park Hyung-woo, an analyst at Shinhan Investment Corp., said in a report issued earlier in July. The smartphones will enjoy higher demand than any other electronic devices, he forecast.

He added that Samsung Electro-Mechanics shares, in particular, are very attractive from a valuation point of view. Its price-to-book (P/B) ratio is close to a record low, with more downside protection than other large-cap electrical and electronics stocks, Park said.

Write to Hyeong-Gyo Seo at seogyo@hankyung.com
Jihyun Kim edited this article.