The author is an analyst at NH Investment & Securities. You can reach him at
[email protected]. — Ed.
Samyang Optics manufactures interchangeable lenses that can be used in mirrorless and DSLR cameras. The market for interchangeable lens is expected to rebound due to an increase in outdoor activity and a rebounding film industry following the transition of Covid-19 pandemic from endemic. There is also a growing demand for high quality videos. Additional high growth is expected on the entry into new businesses—industrial thermal imaging and machine vision lenses.
Korea’s only interchangeable lens player with global presence
Samyang Optics has established a strong position in the Manual Focus (MF), product market. Now, Samyang Optics plans to expand its business by launching lenses that can be used for film and Auto Focus (AF). The interchangeable lens market is dominated by just a handful of companies due to a lofty technological entry barrier—major competitors include Carl Zeiss (MF products, Germany), Sigma, and Tamron (AF products, Japan). Samyang Optics sells products to more than 70 countries, with a particular focus on the US and Europe.
You can benefit from endemic film industry growth and transition by entering the AF market and reap the benefits of new businesses
The high specification standards of smartphones are reducing demand for interchangeable lens cameras. However, professional and film-shooting use continues to demand high-end lenses. While the interchangeable lens market and the firm’s earnings have been dampened by the impacts of Covid-19, the interchangeable lens market is expected to resume growth on an uptick in outdoor activity amid the endemic transition, a film industry recovery, and rising demand for high-quality video for OTTs and YouTube. The company expects strong earnings growth from its continued efforts to penetrate the AF market as well as its entry into the machine vision lens and industrial thermal imaging camera markets.
Samyang Optics continues its shareholder-friendly distribution policy. It is supported by stable cash flow, zero-leverage policies, and business model characteristics that don’t require large facility investments. Earnings growth should start in earnest this year as DY is expected be substantial.
Despite a recent share price jump, the firm’s valuations remain undemanding at a 2022E P/E of 9.9x. A positive business environment is expected to drive earnings growth. If new business results are realized, expect strong margins and healthy dividend payments.
