[Click eStock] Silicon Works, Earnings Soar 50%... Actively Recommend Increasing Weight

[Asia Economy Reporter Lee Seon-ae] Hi Investment & Securities announced on the 11th that it maintains a 'Buy' rating and a target price of 96,000 KRW for Silicon Works, recommending an overweight position due to the possibility of upward revisions in earnings.

Silicon Works' first-quarter results are expected to significantly exceed market expectations (sales of 308.8 billion KRW, operating profit of 21.4 billion KRW), recording sales of 360.8 billion KRW (YoY: +70%, QoQ: -1%) and operating profit of 31.5 billion KRW (YoY: +169%, QoQ: +27%).

Accordingly, the annual earnings consensus is also likely to be revised upward. This year's performance is expected to show strong growth following last year, as the proportion of highly profitable OLED driving chips expands due to increased shipments of OLED panels for LG Display's OLED TVs, iPhone OLED panels, and small- to medium-sized OLED panels from BOE and CSOT.

Traditionally, earnings tend to deteriorate significantly in the first quarter, which is a seasonal low period. However, this year, the supply shortage of DDI has led to concentrated orders from major clients, making the strong performance outlook quite encouraging. This is supported by the fact that Taiwanese Novatek, which operates in a business area very similar to Silicon Works, saw its sales in January and February increase by about 52% compared to the same period last year.

Jeong Won-seok, a researcher at Hi Investment & Securities, emphasized, "Silicon Works' current stock price is significantly undervalued, trading at a price-to-earnings ratio (P/E) of 8.5 times based on this year's expected earnings, which is well below the historical average level," adding, "Given the potential for substantial earnings growth and multiple expansion leading to stock price appreciation, we strongly recommend actively increasing the weighting."