[Edaily Reporter Shin Ha-yeon ] On the 28th, EUGENE INVESTMENT & SECURITIES assessed that RFHIC CORPORATION(218410)posted third-quarter earnings that exceeded market expectations, driven by expanded overseas defense sales, and recommended that investors view the recent stock price correction as an opportunity to increase their holdings. The firm maintained its “Buy” rating and target price of 72,000 won.

Lee Chan-young, an analyst at EUGENE INVESTMENT & SECURITIES, stated in a report released that day, “The fundamentals of both RFHIC CORPORATION and RF Materials remain solid, and earnings growth is expected to continue in the fourth quarter and throughout 2027,” adding, “Now is the time to take advantage of the current stock price correction as an opportunity to actively increase holdings.”

RFHIC CORPORATION’s third-quarter consolidated revenue reached 71.1 billion won, a 75% increase year-over-year, while operating profit surged 194% to 21.7 billion won. Operating profit exceeded the market consensus by approximately 42%. As the share of high-margin overseas defense sales expanded, the operating profit margin also reached 30.5%.

Revenue by business division totaled 17.7 billion won for telecommunications and 50.8 billion won for defense. While the telecommunications division continues to be affected by reduced investment in Chonbang industries—excluding contributions from RF Materials—the defense division saw revenue increase by 87% quarter-over-quarter, driven by supply volumes to Raytheon.

Revenue growth is expected to continue in the fourth quarter. EUGENE INVESTMENT & SECURITIES projected RFHIC CORPORATION’s fourth-quarter consolidated revenue at 101.4 billion won and operating profit at 21.0 billion won. However, the firm anticipated that the proportion of domestic defense sales—which are relatively less profitable—would increase as the remaining overseas defense order volume and a large volume of Cheon-gung 2 supplies to LIG D&A are reflected in the results.

The analyst noted, “We expect a resulting decline in margins to be inevitable,” but added, “In 2027, consolidated revenue is projected to reach 361 billion won and operating profit 83.5 billion won, indicating a continued upward trend in profit levels.” The analyst also anticipated improved profitability driven by additional overseas defense orders and an increased share of such revenue.

The analyst also highlighted the growth potential of the subsidiary RF Materials. RF Materials’ third-quarter consolidated revenue reached 24.8 billion won, a 70% increase year-over-year, while operating profit rose 158% to 4.9 billion won. However, the results fell short of market expectations due to the deferral of revenue recognition for some shipments and the impact of exchange rates.

The analyst explained, “Demand for pump lasers remains strong, and RF Materials is also maintaining high capacity utilization rates amid ongoing supply shortages,” adding, “The revenue recognition issue this quarter stems from accounting differences related to the timing of client acquisitions, not from production or shipment disruptions.”

He continued, “With the combination of volumes carried over from the third quarter and the effects of increased production—which began to be reflected at the end of the third quarter—we expect significant growth in the fourth quarter, with consolidated revenue of 40.2 billion won and operating profit of 6.3 billion won.” He also noted that there have been no changes to the schedule for the new plant, which is set to begin operations at the end of 2027, and expects the benefits of expanded production capacity to take full effect starting in 2028.

Analysts also assess that the stock price has room for further appreciation. As of the closing price on the 27th, RFHIC CORPORATION’s stock price stood at 46,900 won, leaving an upside potential of approximately 53.5% relative to the target price. The projected price-to-earnings ratio (PER) for 2027 is about 18 times, which analysts note places the stock at the lower end of its valuation band over the past year.

The analyst emphasized, “Medium- to long-term momentum drivers—such as additional overseas defense contracts, selection as an Ericsson vendor, U.S. spectrum auctions, and monetization of semiconductor equipment components—remain valid,” adding, “The materialization of these drivers could lead to earnings growth and higher multiples at any time.”

He added, “Since deteriorating sector sentiment and various concerns have been reflected in the stock price for quite some time, we expect the stock to react more sensitively to positive factors—such as solid fundamentals and earnings improvements—rather than additional negative developments going forward.”