[Click eStock] "MCNEX, Concerns Over Weak IT Demand in Second Half... Target Price Down 3%"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating on MCNEX on the 11th and set a target price of 63,000 KRW, down 3% from the previous target. This reflects the increased uncertainty in IT demand in the second half of the year, as the stock price is heavily influenced by smartphones.

MCNEX's sales in the first quarter were 301.7 billion KRW, an 18% increase compared to the same period last year. Operating profit was 4 billion KRW, down 11%, significantly below market expectations. Gilhyun Baek, a researcher at Yuanta Securities, stated, “Even considering one-time costs, the overall profitability was weak due to the reduced effect of new smartphone products from key clients and the price increase of automotive image sensors.”

For the second quarter, expected sales and operating profit are 336.8 billion KRW and 15.3 billion KRW respectively, representing a 78% increase year-on-year and a return to profitability. This is due to the full-scale supply of mid-to-low-end smartphone optical image stabilization (OIS) technology and improved profitability from price pass-through of automotive image sensors.

Samsung Electronics' annual shipment volume is expected to increase by 7% year-on-year to 290 million units. Among these, shipments of mid-to-low-end smartphones are predicted to rise 10% to 210 million units during the same period. Researcher Baek explained, “Although uncertainty remains high due to the Ukraine war and ongoing COVID-19 lockdowns in some global regions, component supply is expected to ease in the second half of the year, leading to a recovery compared to the same period last year.”

The automotive market itself is understood to be experiencing delayed recovery due to semiconductor supply imbalances. However, a gradual recovery is expected as the year progresses. Researcher Baek added, “The trend of increasing the number of camera modules installed per vehicle and the enhancement of vehicle camera module functions will highlight the growth potential of the automotive camera module market through next year.”