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Diversified customer base; materials business progress is key

Leader in dry-process equipment; order backlog quality has improved

People & Technology’s (PNT) current W1.5tr order backlog is markedly different in composition from the backlog of five years ago. At end-2021, the firm had a W900bn backlog concentrated among Chinese and Korean cell makers. By contrast, the backlog mix as of end-1H26 consisted of roughly 30% each from China, Europe, and the US, with Korea accounting for 10%. Notably, India has emerged as a new source of orders. A new 40GWh battery cell plant is under construction in the country, and PNT is expected to receive related electrode manufacturing equipment orders.

PNT’s diversified order structure should allow differences in capacity expansion cycles across regions to offset one another, smoothing order volatility. This is particularly meaningful at a time when Korean cell makers are prioritizing utilization of existing lines over new capacity additions. The firm’s technological positioning is also becoming clearer. Over the past six months, its patent applications related to dry-electrode technology increased from eight to 20, while those related to ultra-high-pressure roll presses for all-solid-state batteries rose from three to five.

Key is translating equipment cash flow into materials business growth

PNT posted disappointing 1H26 results, with revenue of W219bn (-17% YoY) and operating profit of W12.5bn (-66% YoY; OP margin of 5.7%). This was not due to weak demand, but rather reflected: 1) deferred revenue recognition due to delays in the acceptance and delivery of major projects; and 2) a greater fixed-cost burden resulting from lower utilization. The fact that the backlog remained at W1.5tr amid revenue contraction also suggests that revenue recognition was merely deferred. For 3Q26, we expect operating profit to recover to W16.8bn (+25% YoY).

PNT’s Chinese subsidiary has established annual copper foil capacity of 20,000 tonnes and plans to expand this to 35,000 tonnes in 2027 and 50,000 tonnes in 2029. As the cash generated by the equipment business is deployed into the materials business, the pace of revenue growth and margin improvement in materials will be key going forward.

Lower TP to W40,000; reassess earnings power based on 2027 outlook

We lower our target price for PNT to W40,000 (from W70,000), reflecting: 1) a shift in our valuation base year from 2026F to 2027F; and 2) a reduction in our target P/E from the three-year average of 15x to the five-year average of 11x. Our target price is based on a 2027F EPS of W3,512. For 2026, we forecast revenue at W760.2bn (+2% YoY) and operating profit at W75bn (-21% YoY; OP margin of 9.9%). For 2027, we look for revenue of W951.8bn (+25% YoY) and operating profit of W118.1bn (+57% YoY; OP margin of 12.4%).

Importantly, our target price revision reflects delays in revenue recognition rather than a loss of order volume. At end-2Q26, the consolidated order backlog comprised 447 orders worth W1.551tr, an increase from end-2025. In 1H26, new orders totaled W251.1bn, equivalent to 65% of full-year 2025 order intake.