[Click eStock] "Sekyung Hightech, Securing Earnings Visibility is Priority"

NH Investment & Securities "Downgrade Sekyung Hightech Target Price to 19,000 KRW"
Opportunity for Earnings Recovery from Second Half of the Year

[Asia Economy Reporter Gong Byung-sun] Despite proactive facility investments, Sekyung Hightech's target stock price has been downgraded due to underwhelming performance. However, performance is expected to improve in the second half of the year, and securing performance visibility is likely to be a prerequisite for upgrading the investment opinion.

On the 9th, NH Investment & Securities downgraded Sekyung Hightech's target stock price from 26,000 KRW to 19,000 KRW, maintaining a 'Hold' investment rating. NH Investment & Securities explained that the calculation was based on applying the existing target price-to-earnings ratio (PER) of 13.5 times to this year's earnings per share.

Sekyung Hightech's performance is expected to be sluggish this year. Delivery of the anticipated Glastic cases was delayed, and shipments of deco films also decreased. Additionally, unit prices declined. Most notably, after making proactive facility investments expecting sales growth in Glastic cases and deco films, sales were weaker than expected, leading to increased fixed costs. Researcher Lee Kyu-ha of NH Investment & Securities said, "We have lowered Sekyung Hightech's operating profit and net profit forecasts by 28.7% and 27.5%, respectively, for this year."

OLED (Organic Light Emitting Diode) panel shipments were also unsatisfactory. Although OLED display shipments expanded in the fourth quarter of last year, improving margins, shipments of OLED panels decreased again in the first quarter of this year. The sluggish shipments of foldable smartphones due to the absence of new models also had an impact. NH Investment & Securities predicts that this sluggishness may continue through the first half of the year.

However, improvement is expected from the second half of the year. From the end of the second quarter, performance is expected to gradually improve with expanded shipments of OLED panels for new models and deliveries of protective films for smartphones. A full-scale performance recovery is anticipated to be possible from the second half of the year. In particular, from the third quarter, opportunities to recover performance will arise, such as increased production of foldable smartphones and potential deliveries of Glastic cases. Researcher Lee explained, "Expanding performance visibility is a prerequisite for upgrading Sekyung Hightech's investment opinion."