[Click eStock] "Enox Advanced Materials, Expected to Achieve Record High Performance Since Establishment This Year... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment raised the target price of Enox Advanced Materials from 55,000 KRW to 70,000 KRW on the 18th, expecting the company to continue achieving its highest performance since its founding this year as well. The investment opinion was maintained as 'Buy.'

Last year's fourth-quarter performance is estimated to be favorable. Researcher Hwang Seonghwan of Shinhan Financial Investment stated, "We revise upward the fourth-quarter consolidated sales and operating profit of Enox Advanced Materials to 13.1 billion KRW and 28.2 billion KRW, respectively, representing increases of 53.7% and 49.4% compared to the same period last year, exceeding previous estimates." He explained, "Due to steady demand for OLED TV encapsulation materials, which were expected to undergo year-end inventory adjustments, a surprise performance is anticipated." Since the specialty film industry features maximized operating leverage as utilization rates increase, the operating profit margin for the fourth quarter is expected to remain in the 20% range, following the third quarter.

This year is also expected to continue the highest performance since the company's founding. Shinhan Financial Investment estimates Enox Advanced Materials' sales and operating profit for this year at 533.5 billion KRW and 113.5 billion KRW, respectively, representing increases of 12% and 22.7% compared to the previous year. The operating profit margin is expected to improve significantly from 13.1% in 2018 and 13.0% in 2020 to 21.3% this year. Researcher Hwang analyzed, "With diversification of LG Display's client base, the White OLED (WOLED) market expansion will continue this year. Accordingly, demand for OLED TV encapsulation materials is also expected to increase, and the sales proportion of the Innoled TV segment is projected to expand from 21.4% in 2019 to 24.1% in 2020, 37.2% in 2021, and 39.9% this year." Furthermore, the expansion of the foldable smartphone market and entry into the Greater China smartphone market are expected to diversify the product portfolio of the Innoled mobile and Smartflex segments.

Researcher Hwang said, "The target price of 70,000 KRW was calculated by applying a price-earnings ratio (PER) of 15 times to the expected 2022 earnings per share of 464.9 billion KRW. Considering that the target PER is still undervalued compared to major OLED material companies, the current stock price is an active buying zone."