[Asia Economy Reporter Oh Ju-yeon] KB Securities expects Samhwa Capacitor's Q2 earnings this year to meet market consensus, maintaining a 'Buy' investment rating and raising the target price by 18% to 65,000 KRW.
According to KB Securities on the 30th, Samhwa Capacitor's Q2 sales are expected to be 49.7 billion KRW, and operating profit 4.6 billion KRW, down 19% and 57% respectively compared to the same period last year. These figures are in line with market consensus.
Researcher Lee Chang-min analyzed, "MLCC demand continues to be sluggish," adding, "Since March, the impact of COVID-19 has caused the closure of distribution channels in North America and Europe, shutdowns of production facilities at front-end customers, and postponements of major sporting events (Tokyo Olympics, Euro 2020, etc.), all acting as simultaneous downward factors."
He further noted that poor performance is expected due to decreased demand in the automotive market (for automotive MLCC, DC-LC, etc.), which significantly affects Samhwa Capacitor's results.
However, he expressed expectations that earnings will show improvement from the second quarter onward.
This year, Samhwa Capacitor's sales are forecasted at 245.8 billion KRW and operating profit at 30.2 billion KRW, down 3% and 19% respectively from the previous year. Due to the COVID-19 impact, a decline in demand for automotive parts and IT sets, which are front-end industries, is anticipated, making short-term earnings damage inevitable. Nevertheless, through gradual improvement in supply and demand conditions in the second half of the year, an industry recovery centered on new demand (electric vehicles, 5G communication equipment, etc.) is expected in 2021, leading to an upward earnings trend from the Q2 bottom this year.
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