SKIET Unable to Escape Semiconductor Shortage... "Expecting Rebound in Second Half"

[Asia Economy Reporter Myunghwan Lee] SK Innovation Electronics Technology (SKIET), which turned to a deficit in the fourth quarter of last year due to the semiconductor supply shortage, is expected to rebound in the second half of this year.

According to the securities industry on the 2nd, SKIET recorded an operating loss of 29 billion KRW in the fourth quarter of last year, turning to a deficit. The operating profit margin was -18.9%. The net loss amounted to 8.7 billion KRW, also turning to a deficit. Sales increased by 13% to 153.4 billion KRW.

KB Securities analyzed that SKIET's performance fell short of market expectations due to reduced electric vehicle production caused by the semiconductor supply shortage. Changmin Lee, a researcher at KB Securities, pointed out the reasons for the operating loss, saying, "Due to the semiconductor shortage, production of smartphones in China and global electric vehicles decreased, resulting in poor separator performance, and the new business division also experienced sales gaps and losses due to delayed market development of FCW (Flexible Cover Window)."

KB Securities maintained a buy rating on SKIET but lowered the target price by 25% from 240,000 KRW to 180,000 KRW. However, they expect a performance rebound in the second half of the year. The researcher analyzed, "The demand slowdown from front-end customers such as automakers due to semiconductor shortages will continue until the first half of the year, but from the second half, as the Chinese and Polish factories begin full-scale operations and separator production capacity expands, a recovery in front-end demand is expected, making a performance rebound possible."

The company's 2022 sales are projected to increase by 34% from last year to 804.5 billion KRW, and operating profit is expected to rise by 34% to 168 billion KRW.