[Click eStock] "Deoksan Neolux, China Sales Decline... Target Price Down"

[Asia Economy Reporter Lee Jung-yoon] Yuanta Securities downgraded its earnings estimates for Duksan Neolux on the 23rd due to a decline in sales in China, lowering the target price from 100,000 KRW to 75,000 KRW. However, it maintained a buy rating, stating that the growth trend is expected to continue.

Duksan Neolux's sales for the first quarter of this year are expected to be 41.2 billion KRW, down 3% year-on-year, and operating profit is forecasted at 10.6 billion KRW, down 8%. Researcher Kim Kwang-jin of Yuanta Securities said, "Despite this quarter reflecting the effect of the new Galaxy S22 launch, a sharp decline in sales in China makes negative growth inevitable," adding, "Considering that inventory stockpiling purchases were concentrated in the first quarter, with the proportion of sales to China estimated to have approached about 33%, the impact of the decline in sales to China in the first quarter of this year will be even more pronounced." Duksan Neolux's sales in China this year are estimated to be around 30.3 billion KRW, about 20% lower than the previous year, due to the exclusion of Duksan Neolux's materials from the new material structure of a key customer.

Reflecting the decline in sales in China this year, Duksan Neolux's sales for this year are projected to increase 13% year-on-year to 216.9 billion KRW, and operating profit is expected to rise 17% to 59.8 billion KRW, which is about 15% lower than previous estimates.

However, the growth trend is expected to continue due to increased supply to notebook PCs. Researcher Kim said, "Sales to notebook PCs this year are expected to grow by more than 50% year-on-year due to increased shipments by customers." He added, "There is potential for expanded application of Black PDL, which was the basis for last year's stock price rise, and a reflective benefit is also expected from the downward revision of BOE's iPhone supply forecast."