KOSDAQMachinery083930

Avacoco

₩12,670▲ 0.72%2026-10-02 close

Market Cap

₩185.7B

Turnover

₩500M

Volume

40,000 shares

Shares out.

14.7M

PER

9.9×

PBR

0.8×

EPS

₩1,139

Dividend Yield

4.41%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩500 per share · Prices as of the 2026-10-02 close

Report overview

OLED Investment Tailwind Meets a Rough First Half

Avaco posted record annual revenue and operating profit in 2025 on the back of the 8.6-generation OLED investment cycle, but booked two consecutive quarterly operating losses in the first half of 2026 as project-based revenue recognition slipped.

1
2025 consolidated revenue reached KRW 392.9 billion and operating profit KRW 34.6 billion, up 28.6% and 64.0% year-on-year respectively, marking the company's best annual results on record.
2
Consolidated revenue fell sharply to KRW 14.8 billion in Q1 2026 and KRW 16.5 billion in Q2 2026, with operating losses recorded in both quarters.
3
Investment by China's BOE and CSOT in 8.6-generation IT-use OLED lines, along with a supply contract with LG Display, form the core growth driver of the display equipment segment.
4
The company stated its order backlog stands at a record high and attributed the weak first-half results mainly to delayed revenue recognition timing.
5
The company continues diversifying into secondary battery equipment, MLCC equipment, metal sputter for semiconductor packaging, and glass substrate processing.

Business structure

Avaco is a KOSDAQ-listed company that started as an LCD equipment maker in 2000 and grew its display manufacturing equipment business on the strength of vacuum thin-film deposition technology.

Its flagship product, the OLED Vacuum Transfer System, is a technology-intensive piece of equipment that precisely transports substrates and masks during the OLED deposition process while maintaining vacuum conditions, and the company describes itself as the sole domestic firm to have completed world-first verification in this area.

The company established a secondary battery equipment division in 2020, expanding into automated logistics equipment and roll-press machines for the electrode process, and the revenue share of secondary battery equipment grew from 3.6% in 2021 to 36.5% in 2023 and around 75% in 2024.

It has continued diversifying since then into MLCC process equipment, metal sputter equipment for semiconductor packaging, and dry-process PCB equipment through a joint venture with Germany's SCHMID Group.

More recently, the company has secured potential for its metal sputter equipment to be applied to high-performance AI semiconductor processes such as HBM, and is conducting equipment evaluations with domestic OSAT companies, while also developing TGV laser processing and dry plasma process equipment targeting next-generation glass substrate packaging.

Leveraging low-damage sputter technology accumulated in display processes, the company is also exploring entry into next-generation solar equipment markets such as perovskite solar cells.

Major customers include large panel makers such as China's BOE, CSOT, and LG Display, as well as secondary battery makers such as Ultium Cells, the joint venture between LG Energy Solution and GM.

Affiliate Avatec, which operates MLCC release film and display coating businesses, is a related company linked to Avaco's MLCC equipment supply.

Earnings trend

Quarterly revenue · Operating profit

₩159B₩19.4B25Q2₩50.9B₩7B25Q3₩156.9B₩11.6B25Q4₩14.8B-₩4B26Q1₩16.5B-₩11B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩217.3B₩13.6B2022₩186.9B₩4.4B2023₩305.5B₩21.1B2024₩392.9B₩34.6B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩159B	₩19.4B	12.2%
2025Q3	₩50.9B	₩7B	13.7%
2025Q4	₩156.9B	₩11.6B	7.4%
2026Q1	₩14.8B	-₩4B	−27.0%
2026Q2	₩16.5B	-₩11B	−66.9%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩217.3B	₩13.6B	₩18.1B	6.2%	10.7%	64.9%
2023	₩186.9B	₩4.4B	₩4.3B	2.4%	2.3%	87.3%
2024	₩305.5B	₩21.1B	₩26.4B	6.9%	13.1%	94.2%
2025	₩392.9B	₩34.6B	₩28.7B	8.8%	12.9%	45.8%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-21

Earnings analysis

In 2025, consolidated revenue reached KRW 392.9 billion and operating profit KRW 34.6 billion, up 28.6% and 64.0% respectively from 2024's revenue of KRW 305.5 billion and operating profit of KRW 21.1 billion, marking the company's best annual performance on record.

The operating margin improved from 6.9% in 2024 to 8.8% in 2025, a clear recovery from the thin 2.4% margin seen in 2023.

Net profit attributable to owners rose modestly to KRW 28.65 billion in 2025 from KRW 26.39 billion in 2024, a smaller increase than the operating profit growth rate, suggesting a relatively reduced contribution from non-operating items. Quarterly results show pronounced volatility.

After posting revenue of KRW 159.0 billion and operating profit of KRW 19.4 billion in Q2 2025, revenue plunged to KRW 50.9 billion in Q3 2025, yet operating profit stood at KRW 7.0 billion and net profit actually rose to KRW 9.1 billion; revenue then surged again to KRW 156.9 billion in Q4 2025 with operating profit of KRW 11.6 billion and net profit of KRW 13.9 billion.

By contrast, Q1 2026 revenue fell sharply to KRW 14.8 billion with an operating loss of KRW 4.0 billion, and Q2 2026 revenue was KRW 16.5 billion with the operating loss widening to KRW 11.0 billion and net profit turning into a loss of KRW 7.6 billion.

According to a Newspim report, Avaco's standalone Q2 revenue was KRW 12.0 billion with an operating loss of KRW 12.7 billion and a net loss of KRW 9.0 billion, and the company explained that first-half results were weak because revenue recognition timing shifted along with the manufacturing and delivery schedules of major projects.

The company also stated that its order backlog has grown to a record high, with new and additional orders continuing to come in, centered on display equipment.

This project-based revenue recognition structure, characteristic of the equipment industry, is the key feature driving the large quarterly swings seen in recent results.

Industry analysis

The global display industry is in the midst of a shift toward investment in 8.6-generation IT-use OLED.

China's BOE is investing roughly KRW 11 trillion in 8.6-generation IT-use OLED targeting mass production by the end of 2026, while CSOT and Visionox are also pursuing 8.6-generation OLED, ViP, and inkjet adoption, driving continued orders for vacuum oven and sputter equipment.

Such investment typically appears first as equipment orders, followed by factory completion and yield stabilization, then increased material consumption, and finally stabilization of panel utilization and pricing.

Avaco, as the sole domestic company to have completed world-first verification of vacuum deposition logistics systems, is positioned to benefit in the earlier stages of this investment cycle.

On the other hand, the secondary battery equipment segment has reportedly seen recent performance weaken due to slowing electric vehicle demand. In the MLCC equipment market, key customer Avatec is pursuing a plan to expand four MLCC production lines by 2026, opening potential for related equipment supply.

In semiconductor packaging, there is potential for increased demand for metal sputter and related equipment amid growing AI semiconductor demand such as HBM, but the equipment is still at the evaluation stage with domestic OSAT companies, and the timing of any earnings contribution remains unconfirmed.

Outlook

Avaco recently signed a supply contract with LG Display for vacuum deposition and automation systems for an OLED production line, and secured an additional supply contract with China's BOE covering vacuum deposition and automation systems tied to BOE's follow-on 8.6-generation investment, running through December 2027.

For CSOT's next-generation IT-use 8.6-generation OLED investment, the company agreed to supply core OLED equipment including Low Damage sputters and Chuck/Mask Return Systems.

While the company has noted that project schedules can create quarterly earnings volatility, it expects gradual improvement in results as its record-high order backlog is progressively recognized as revenue.

In the secondary battery segment, the company is pursuing business diversification, having developed a TANDEM ROLL PRESS MACHINE for the electrode process and secured its first order. Development of semiconductor inspection equipment is also underway, which could further diversify revenue sources over the medium term.

However, the timing of revenue contribution from these new businesses remains fluid, depending on customer evaluation and qualification processes.

Valuation

PER

9.9×

PBR

0.8×

ROE

8.4%

EPS

₩1,139

BPS

₩14,725

Dividend per share

₩500

Because Avaco is a project-based equipment stock whose results swing between large profits and losses, its valuation metrics also fluctuate on a quarterly basis.

While annual profits continued to recover through 2025, the two consecutive quarterly operating losses in the first half of 2026 mean that, on a trailing four-quarter basis (Q3 2025 through Q2 2026), profit levels sit in a reduced range relative to the full 2025 year.

The price-to-book ratio, which reflects the value the market assigns relative to net assets, has recently traded at levels close to or below net asset value based on historical patterns.

On the dividend side, the company has paid a cash dividend annually, though its dividend yield level is generally considered lower than the industry average.

Investors may want to monitor both the pace at which the growing order backlog converts into actual revenue and the resulting quarter-to-quarter earnings volatility.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-21

Bull factors

Early Beneficiary of the 8.6-Generation OLED Investment Cycle

Chinese major panel makers such as BOE and CSOT are making large-scale investments in 8.6-generation OLED for IT applications, and Avaco is participating as a core equipment supplier for these investments as the only domestic company that has completed the world's first verification in the vacuum deposition logistics system field.

Numerous contracts have recently been secured, including a supply agreement with LG Display, additional contracts through December 2027 related to BOE's follow-up investment, and supply of core equipment for CSOT.

While these orders have not yet fully converted into revenue, there is potential for continued earnings contribution as equipment delivery gains momentum going forward.

Record-High Order Backlog

The company stated in its Q1 and Q2 2026 earnings releases that its order backlog had grown to a record high level.

Delayed revenue recognition due to project schedules was cited as the main cause of recent weak performance, with the company explaining that as ongoing projects are reflected sequentially, there is potential for gradual improvement in future performance.

Expanding New Business Portfolio

Metal sputter equipment for semiconductor packaging has secured potential for application in AI semiconductor processes such as HBM, with equipment evaluation currently underway with domestic OSAT companies.

The company also holds a diversified new business pipeline including TGV laser processing equipment for next-generation glass substrate-based packaging and the first order for a TANDEM ROLL PRESS MACHINE for secondary battery electrode processes.

If this diversification is successfully established, it could buffer volatility in the existing business structure, which has high dependence on displays.

Bear factors

Earnings Volatility from Project-Based Revenue Recognition

Consolidated revenue for Q1 and Q2 2026 was KRW 14.8 billion and KRW 16.5 billion respectively, sharply down compared to Q2 2025 (KRW 159.0 billion) or Q4 2025 (KRW 156.9 billion), with both quarters recording operating losses.

Given the project-based revenue recognition structure characteristic of the equipment industry, revenue can repeatedly concentrate in or be absent from specific quarters, making it difficult to judge the direction of the business based on short-term performance alone.

Demand Slowdown in the Secondary Battery Segment

The secondary battery manufacturing equipment segment is understood to have recently deteriorated due to the effects of slowing EV demand. If this segment, which once significantly increased its share of revenue, weakens further, dependence on the single pillar of display equipment could rise again.

Net Profit Swings Driven by Non-Operating Factors

There have been recurring periods where non-operating items had a significant impact on results, such as in 2022 when net income (KRW 18.1 billion) exceeded operating profit (KRW 13.6 billion), and in Q4 2025 when net income (KRW 13.9 billion) was higher than operating profit (KRW 11.6 billion). This is a factor that makes it difficult to predict annual net income based on operating performance alone.

Risk factors

Customer and Regional Concentration Risk

As the core revenue source, 8.6-generation OLED investment is concentrated among a small number of large panel makers such as China's BOE and CSOT, so these customers' pace of investment, policy changes, or geopolitical risks such as US-China conflict could directly affect performance.

The fact that contract amounts are often undisclosed due to non-disclosure agreements (NDAs) is also a constraint, as it makes it difficult for investors to gauge the actual scale and profitability of orders.

Revenue Recognition Timing Uncertainty

Due to the nature of the equipment industry, even a slight delay in the manufacturing, inspection, or delivery schedule of a large project can significantly shake performance in a specific quarter.

The recent two consecutive quarters of losses are an example of this project schedule risk materializing, and the possibility of similar volatility recurring in the future cannot be ruled out.

Risk of Delayed Commercialization of New Businesses

Metal sputter equipment for semiconductor packaging is still in the evaluation stage with domestic OSAT companies, and MLCC equipment is also dependent on the pace of expansion plans of Avatech, a key customer.

If new businesses fail to pass customer certification and mass production verification, or if schedules are delayed, the diversification effect may not materialize as expected.

What to watch next

Around November 2026
Around this time, Avaco is expected to disclose preliminary Q3 2026 results, making it important to check whether revenue and operating profit recover as the order backlog is recognized.
From Q4 2026 onward
Investors should track the pace of equipment delivery and ramp-up at BOE and CSOT's 8.6-generation IT-use OLED lines to gauge how quickly backlog translates into actual revenue.
Upon confirmation of Avatec's four-line MLCC expansion completion
It is worth confirming whether affiliate Avatec completes its MLCC production line expansion and whether actual equipment supply from Avaco begins accordingly.
When results of the OSAT customer evaluation are announced
The outcome of customer evaluations for metal sputter equipment targeting HBM and other AI semiconductor packaging applications could be a turning point for the success of this new business line.

Overall view

Avaco delivered record annual revenue and operating profit in 2025, driven by the expanding 8.6-generation OLED investment cycle, showing a clear profit recovery trend.

However, in the first half of 2026 the company posted two consecutive quarterly operating losses due to delayed project-based revenue recognition, reaffirming the quarterly volatility characteristic of the equipment industry.

The company has stated that its order backlog is at a record high and points to contracts with LG Display, BOE, and CSOT as the basis for potential future earnings recovery.

At the same time, bearish factors persist, including slowing demand in the secondary battery segment, customer concentration risk, and uncertainty over the commercialization timeline of new businesses.

Investors may want to monitor both the pace at which the order backlog converts into actual revenue in coming quarters and the timing of concrete results from new businesses in semiconductors, MLCC, and solar equipment. This report is provided for informational purposes only and does not constitute a buy or sell recommendation.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.