The profitability of camera module maker MCNEX, which recorded an operating profit margin of 6% last year, is expected to improve once again. It is expected that the cost will be reduced by moving additional production lines to Vietnam.
The plant in Vietnam produces mainly camera modules for smartphones.
On the 25th, an MCNEX official said, "After establishing a subsidiary in Vietnam in 2013, we have been continuously increasing our production line in Vietnam." Here, the company can supply the products to its largest customer, Samsung Electronics Vietnam, on time. The portion of MCNEX sales to Samsung Electronics in the third quarter of last year was 77.0%, which overwhelms the sales to other customers. As Samsung Electronics' low-end smartphones have also been installed with multi-cameras, MCNEX's sales also increased. "I think MCNEX has entered into a profitability improvement stage because of the increase in sales of camera modules and fingerprint recognition modules and the transfer of production lines to Vietnam," said Na Seung-Doo, a researcher at SK Securities.
It is expected that the camera module business for the automobile industry is in need of some improvements. Kim Jae-Hoon, a researcher at Mirae Asset Daewoo, said, "The items that increase MCNEX's future growth expectation are camera modules for vehicles. Its (last year) sales growth slowed due to the low volume of vehicle sales of domestic customers. The company needs to expand its customers for camera modules for vehicles." Hyundai Mobis, which accounts for 13.9% of total sales as of the end of last year, is a major customer. Sales of camera modules for automobiles have remained at 110 billion won for three years since 2016.
Researcher Na said, "(MCNEX) expects that it will be able to grow additional sales after securing localized technology, taking charge of the national project 'Development of autonomous vehicle front and rear image sensor module' project supported by the Ministry of Commerce, Industry and Energy.
MCNEX posted a large operating margin last year. MCNEX recorded sales of 697 billion won and an operating profit of 41.5 billion won in 2018. The operating margin is 6.0%. Compared to the 2017 operating margin of 2.9% (sales of 668.5 billion won and an operating profit of 19.7 billion won), the figure is doubled.
A company official said, "Cost savings from domestic and overseas cost reductions are the biggest factor in improving profitability." As Samsung Electronics smartphones' implementation of camera modules increased, MCNEX's sales also increased, which meant that efforts to cut costs played an important role. In terms of competitors' operating margin, Partron is 3.8% (sales 799 billion won, operating profit 30.5 billion won), Power Logics is 3.5% (sales 753.9 billion won, operating profit 26.2 billion won), and Cammsys is 3.2% (sales 549.7 billion won and operating profit 17.3 billion won).
Founded in 2004, MCNEX is headquartered in Geumcheon-gu, Seoul. It was listed on the KOSDAQ in 2012. Major customers include smartphone makers such as Samsung Electronics and Kyocera, and automobile companies like Hyundai Mobis and S&T Motiv. The company recorded an operating loss in 2016 due to the battery issue of Samsung Electronics' Galaxy Note 7, for which the company supplied the front-face camera module, but turned to black in 2017. MCNEX's own sales forecast for this year is about 820 billion won.