[Click eStock] "LX Semicon to Exceed Performance Expectations This Year... Historically Undervalued Range"

[Asia Economy Reporter Hwang Yoon-joo] Hi Investment & Securities maintained its 'Buy' rating and target price of 230,000 KRW for LX Semicon on the 21st, stating that despite expected earnings exceeding market expectations this year, the stock remains historically undervalued.

The Hi Investment & Securities Research Center stated, "The first quarter 2022 earnings are expected to show strong performance, with sales of 555.1 billion KRW (YoY +37%) and operating profit of 98.8 billion KRW (YoY +67%), surpassing market expectations (sales of 511.4 billion KRW, operating profit of 87.2 billion KRW)."

The Research Center cited the solid shipments of the core business products, display driver ICs (DDI) and T-Con, as well as some product price increases as the background for the strong first quarter results.

The Hi Investment & Securities Research Center analyzed, "Despite the significant slowdown in front-end demand since the second half of last year, shipments of LCD TV driver chips (DDI) and timing controllers (T-Con) are expected to maintain the previous quarter's level even during the seasonally weakest period," adding, "Since early this year, supply to Chinese panel customers has begun in earnest, leading to market share expansion through customer diversification."

It also evaluated, "Mobile DDI, centered on the iPhone, is expected to minimize seasonality due to increased volume from the Chinese display company 'BOE' despite LG Display's panel inventory adjustments."

Furthermore, it estimated, "The expected sales for 2022 are 2.5 trillion KRW (YoY +32%) and operating profit of 455.2 billion KRW (YoY +23%)," adding, "The current stock price is significantly undervalued at a 2022 expected P/E ratio of 5.9 times compared to the historical average of 11.7 times."