[Click eStock] "Patron, Automotive Camera as Growth Engine"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating and a target price of 17,000 KRW for Patron on the 7th, based on the expectation of improved performance driven by increased demand for automotive cameras.

Patron's first-quarter earnings are estimated to show sales of 358.6 billion KRW and operating profit of 23.3 billion KRW, representing growth of 8% and 48% respectively compared to the same period last year. This is due to the resolution of AP supply issues caused by foundry shortages, leading to normalization of Samsung Electronics' smartphone production line utilization. Additionally, sales for Samsung Electronics' new models this year, such as the Galaxy S22 and Galaxy A23, are beginning to ramp up. The average selling price increase and supply volume growth resulting from the modularization of heart rate sensors for the Galaxy Watch are also contributing positively.

Changmin Lee, a researcher at KB Securities, explained, "The increase in market share within client companies for the Galaxy S22 camera module is notable, with the proportion of flagship model sales in camera module revenue estimated to have expanded from 20% last year to 35% this year. We expect sales growth and profitability improvement compared to the same period last year."

Patron's full-year sales and operating profit for this year are projected at 1.53 trillion KRW and 99.7 billion KRW, respectively, marking a 17% and 27% increase year-on-year and setting a record high annual sales figure. This is due to improved order performance for core products such as camera modules and sensors, and the diversification of camera applications, which is expected to drive continuous demand growth. In particular, for automotive cameras, the number of units installed per vehicle is doubling with the ongoing advancement of autonomous driving, and the average selling price is estimated to be higher than that of smartphone cameras.

Researcher Lee stated, "Automotive cameras are rapidly emerging as a key demand sector within the camera market. As demand for automotive cameras expands with the growth of the autonomous vehicle market, Patron's benefit intensity is expected to increase significantly."