[Click eStock] "Patron, Q4 Last Year Decline Due to Client Slowdown... Performance Improvement from Q2"

[Asia Economy Reporter Eunmo Koo] Mirae Asset Daewoo analyzed that Patron's performance in the fourth quarter of last year fell short of market expectations due to sluggish smartphone sales from its clients. It is expected that performance improvement is likely to begin from the second quarter of this year.

Patron recorded sales of 213.1 billion KRW in the fourth quarter of last year, a 0.7% increase compared to the same period the previous year, while operating profit decreased by 49.2% to 7.5 billion KRW. Wonjae Park, a researcher at Mirae Asset Daewoo, explained in a report on the 24th, “The poor performance was largely influenced by sluggish smartphone sales from clients and worsening market conditions. The decrease in sales volume of the Galaxy Note10 and the impact of inventory adjustments were also negative factors,” adding, “Samsung Electronics' mid-to-low-end smartphone sales also fell short of expectations, leading to a decline in sales.” The seasonal off-peak period could not be avoided.

Sales for the first quarter of this year are estimated to be 254.1 billion KRW, a 13.4% decrease compared to the same period last year, and operating profit is expected to drop by 45.8% to 14.1 billion KRW. Researcher Park stated, “While ToF (Time of Flight) and antennas are being supplied to Samsung Electronics' flagship smartphones, it is understood that camera modules have not been adopted.”

There is a strong analysis that performance improvement will likely begin from the second quarter. Researcher Park explained, “Camera modules are being adopted in new smartphone models, and components such as fingerprint recognition and sensors are continuously increasing.” He added, “In the second half of this year, sales of automotive parts and electronic cigarettes are expected to become full-scale, and with the expansion of the 5G market in the second half, sales of isolators and dielectric filters will also increase, helping improve performance.”

The investment opinion was maintained as ‘Buy’, but the target stock price was lowered from the previous 18,000 KRW to 14,600 KRW. Researcher Park evaluated, “Since last year recorded the highest sales ever, growing pains after rapid growth are inevitable,” and “Improvements in camera functions in smartphones will continue, and as results from new businesses gradually begin to emerge, now is a time to watch rather than worry.”