[Click eStock] MCNEX, Target Price Lowered by 7%... "Performance Expected to Improve in Q2"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating on MCNEX on the 9th but lowered the target price by 7% from the previous to 65,000 KRW. However, it is expected that earnings will improve from the second quarter due to increased sales of automotive components.

Operating profit in the first quarter was 4 billion KRW, down 10% from the same period last year. Sales increased by 18% to 301.7 billion KRW. The decline in operating profit was due to the impact of COVID-19 in Vietnam, which led to decreased camera module sales and increased one-time costs related to COVID-19 measures. In the automotive sector, cost increases and production disruptions caused costs to be reflected proactively compared to plans.

Total sales in the second quarter are estimated to increase by 19.7% to 361.3 billion KRW, higher than the previous estimate of 328.6 billion KRW. Operating profit is expected to reach 17.9 billion KRW, a 348% increase from the first quarter. Kanghoo Park, a researcher at Daishin Securities, said, “The sluggish sales in the first quarter were carried over to the second quarter, and profitability is expected to improve due to scale expansion and normalization of automotive components.”

Daishin Securities estimates annual sales to grow 39% from the same period last year to 1.411 trillion KRW. In the second quarter, automotive production is expected to gradually normalize, leading to increased sales of automotive components. In the fourth quarter, sales of autonomous driving integrated control units (DCU) related to Genesis G90’s Level 3 autonomous driving are expected. Excluding DCU sales, automotive component sales this year are predicted to increase by 22% from the same period last year to 195.7 billion KRW.

Increased sales of drive systems (Auto Focus·OIS) are also expected to contribute to overall operating profit improvement. Drive system sales in the first quarter were 47.4 billion KRW, a 144% increase compared to one year ago. Researcher Kanghoo Park explained, “In the second quarter, OIS (Optical Image Stabilization) will be actively adopted in the Galaxy A series, and as competitors experience market share decline and pursue outsourcing in the OIS segment, MCNEX’s market share is expected to increase. Drive system sales this year are expected to grow 124% from the same period last year to 230.1 billion KRW.”

This content was produced with the assistance of AI translation services.