[Click eStock] "Seoul Semiconductor, Q3 Earnings Impacted by Production Disruptions"... Target Price Down

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 8th that it has lowered the target price for Seoul Semiconductor from 25,000 KRW to 22,000 KRW due to weaker-than-expected third-quarter earnings this year caused by a slowdown in TV demand, delayed adoption of Mini-LED TVs, and disruptions in automobile production.

Seoul Semiconductor's operating profit in the third quarter was 24 billion KRW, down 6% year-on-year and below the market forecast of 27.7 billion KRW. LED for TV BLU saw a diminished peak season effect as LCD TV demand contracted due to a slowdown in untact home entertainment demand, the rise of OLED TVs, and TV price increases triggered by LCD panel price hikes. In particular, Mini-LED, which is highly anticipated as the next-generation product line, experienced weaker-than-expected shipments from TV customers due to strong panel prices, supply disruptions of key components, and a lack of affordable lineup options.

Automotive LEDs were inevitably affected by the shortage of automotive semiconductors and OEM production disruptions. On the other hand, LED prices remained stable, allowing the company to perform relatively well despite worsening upstream conditions.

Sales in the fourth quarter of this year are estimated to increase by 4% year-on-year to 322.6 billion KRW, and operating profit is expected to rise by 30% to 19 billion KRW.

Kim Ji-san, a researcher at Kiwoom Securities, said, "Despite significant earnings improvements this year, Seoul Semiconductor's stock price fell sharply in the second half due to a slowdown in demand for untact devices and delayed adoption of Mini-LED TVs." He added, "Once the component shortage and production disruption issues ease, momentum expected next year includes the full-scale expansion of Mini-LED and Micro-LED achievements, a stabilization of price trends as competition in the LED industry softens, and an expansion of automotive lighting performance centered on headlamps."