[Click eStock] "Amotech, Expected Slump, Q3 Earnings Improvement Forecast"

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained a buy rating and a target price of 45,000 KRW for Amotech on the 21st. Although a weak performance is expected in the first half due to volatility in the mobile sector, the increase in sales of automotive components is expected to enhance earnings stability from the second half onward.

Amotech recorded sales of 54.9 billion KRW in the first quarter of this year, down 10% from the previous quarter. Operating losses continued at 3.3 billion KRW. The sluggish sales are largely attributed to the early production of new flagship smartphone models, which overlapped with the fourth quarter. Additionally, a slight decrease in automotive-related component sales compared to the previous quarter also had an impact.

Sales are expected to remain weak in the second quarter as well, projected to decline 19% from the first quarter to 44.3 billion KRW. Due to the mobile sector downturn, sales of automotive-related components are expected to increase compared to the first quarter.

Kim Unho, a researcher at IBK Investment & Securities, explained, “The mobile sector’s production scale decreased due to semiconductor shortages, and the absence of flagship models worsened the product mix. Operating losses are expected to continue into the second quarter due to weak sales and investment costs in multilayer ceramic capacitors (MLCC).”

However, operating profit is expected to turn positive from the third quarter. This is because NFC sales will increase with the launch of new flagship models, and steady growth in automotive components is anticipated.

Researcher Kim Unho said, “This year will be the first year when Amotech’s sales shift from being mobile-centric to front-end industries, with the automotive sector exceeding 50% of sales. Although earnings volatility due to mobile sector fluctuations is significant, profits are expected to gradually expand more stably.”