[Edaily Reporter Kwon Oh-seok] Meritz Securities expects that #Neotis’s profitability will improve significantly starting in the second quarter, driven by a combination of top-line growth centered on Microbit and the stabilizing effect of raw material prices. However, the firm did not provide an investment rating or a target price.

Neotis, a company specializing in precision components for semiconductors and automobiles, focuses on the manufacture of micro-bits for PCB processing, motor shafts, and lens polishing machines for optical machinery.
Yang Seung-soo, an analyst at Meritz Securities, stated, "We forecast second-quarter revenue and operating profit at 23.3 billion won (+48.3% year-over-year) and 4.1 billion won (+220.2%), respectively. "The micro-bit division is expected to see the full impact of capacity expansion from the installation of new equipment starting in the second quarter," he explained, adding, "Current order volumes from major clients exceed 50% of available supply capacity, so we believe the company will maintain full-capacity operations immediately following the expansion."
He further elaborated, “Our customer base is also expanding smoothly. We have passed quality tests for a domestic MLB manufacturer and expect to begin shipments as early as July. Additionally, demand for lens grinders is increasing due to end-users’ decisions to incorporate camera modules into wearables, and shaft sales are also expected to enter a recovery phase through the expansion of new vehicle models.”
Researcher Yang noted, “We recently decided to issue 18 billion won in CPS (convertible preferred stock), and the funds raised are scheduled to be used for new large-scale greenfield investments, separate from the current expansion through the additional installation of equipment.” "Once both the current expansion and the new greenfield investment are completed, Microbit’s production capacity is projected to expand to 72 million units annually by the second half of 2027. We believe this will sustain a structural growth trend aligned with the expansion cycles of numerous clients," he emphasized.
Furthermore, the company noted, “In particular, as we have secured a competitive edge over rivals in terms of delivery stability and geopolitical risk, we also expect to expand our market share among domestic clients. In fact, our market share is rapidly growing among domestic clients planning large-scale FC-BGA (semiconductor package substrate) capacity expansions, and this expansion is understood to be a strategic decision to meet the increased demand from those clients.”
He added, “We are revising our 2027 operating profit estimate upward by 12.3% to 29.2 billion won (+74.7%), factoring in the additional capacity expansion. As the severity of the drill bit market shortage has reached an all-time high, Natis has also significantly enhanced the visibility of its earnings growth through this expansion.”