[Click eStock] MCNEX, Autonomous Driving Camera Sales to Start in Earnest Next Year 'Target Price Up'

[Asia Economy Reporter Lee Seon-ae] Daishin Securities has maintained its buy rating on MCNEX and raised the target price by 11% to 70,000 KRW. This adjustment is based on upward revisions of next year's sales and operating profit by 8.3% and 27%, respectively.

In 2022, MCNEX is expected to see a significant improvement in profitability due to increased sales of its competitive driving system (OIS) and automotive cameras. Total sales for 2022 are projected to reach 1.34 trillion KRW (35.8% yoy), marking a record high, while operating profit is expected to increase by 190% yoy to 80.7 billion KRW, indicating the start of a full-scale growth phase. Accordingly, the top pick status for the first half of 2022 is maintained.

The substantial increase in sales and operating profit in 2022 is primarily due to the simultaneous growth in quantity (Q) and price (P) of camera modules since 2019. The expansion of foldable phones (estimated to increase from 7.7 million units in 2021 to 14.8 million units in 2022) and the full-scale adoption of 5G in the Galaxy A series are expected to boost Samsung Electronics' total smartphone sales to 300 million units, an 8.5% yoy increase. Additionally, the adoption of optical image stabilization (OIS) components in the Galaxy A series is expected to expand from 2 models in 2021 to multiple models in 2022.

Researcher Kang-ho Park of Daishin Securities stated, "If OIS adoption expands from premium models (Galaxy S) to entry-level models (Galaxy A), camera module suppliers will see an increase in average selling price (ASP), leading to high sales growth in 2022." He added, "MCNEX uniquely supplies OIS to both premium and entry-level models simultaneously, providing a differentiated growth factor compared to competitors." Sales from the driving system (OIS) are estimated to increase by 98% to 187.2 billion KRW in 2022.

Furthermore, the characteristic of the camera module industry in 2022 is judged to be the full-scale start of sales for autonomous driving applications. The automotive industry’s expansion of production of autonomous driving vehicles will lead to increased sales for camera module suppliers. Among mid-sized camera module companies, MCNEX has the highest sales. Researcher Park estimates sales to grow from 152.1 billion KRW (forecast) in 2021 to 197.7 billion KRW in 2022 and 235.5 billion KRW in 2023. He emphasized, "Additionally, if DCU sales to domestic automakers begin in the second half of 2022, further sales are expected in 2023. Since automotive camera module sales are relatively high, we believe valuation upgrades compared to competitors are possible."