[Click eStock] "PI Advanced Materials, Performance Improvement from Q3... Target Price Down 10%"

BNK Investment & Securities Report

[Asia Economy Reporter Minji Lee] BNK Investment & Securities maintained a buy rating on PI Advanced Materials on the 23rd and presented a lowered target price of 51,000 KRW.

Second-quarter sales and operating profit are expected to decrease by 0.4% and 0.8% from the previous quarter to 78 billion KRW and 13.1 billion KRW, respectively. The operating profit margin dropped to 16.9% compared to the previous estimate of 22%.

Minhee Lee, a researcher at BNK Investment & Securities, said, "Despite the price increase effect starting in March, sales in April sharply declined due to the impact of city lockdowns in China," adding, "April is considered the bottom, and performance is rapidly recovering." June is expected to record the highest sales ever, and raw material prices have stabilized downward, indicating that profitability has now returned to normal levels.

In the third quarter, demand is mainly driven by North American smart device customers, and with the new 8th production facility starting operation in July, the highest quarterly sales (94.3 billion KRW) are anticipated. The dimethylformamide (DMF) refining facility, delayed by one month from the original plan, will begin operation in June and is expected to contribute significantly to profitability improvement in the second half of the year. The researcher added, "It is understood that varnish products have been adopted for the foldable phone new model substrates scheduled for release in the second half, and along with secondary battery EVs, the expansion of demand sources is positive."

The current stock price is considered to be in an oversold phase. Researcher Minhee Lee stated, "Due to the exhaustion of M&A factors, poor performance, and concerns about weakening demand in the front-end industry, the stock valuation has fallen to the lowest point since the COVID-19 pandemic," and added, "Since performance is improving from the bottom in April, the buy rating is maintained."