[Click eStock] PI Cheomdan Sosae, Strengthening Internal Structure for 'Performance Improvement'

[Asia Economy Reporter Lee Seon-ae] BNK Investment & Securities announced on the 26th that it maintains a buy rating and a target price of 51,000 KRW for PI Cheomdam Materials.

Minhee Lee, a researcher at BNK Investment & Securities, stated, "Due to inventory adjustments within the smartphone supply chain, the company's stock price has recently plummeted, and we believe the valuation bottom has been confirmed." He emphasized, "Although stock price movements remain sluggish amid uncertainties in front-end demand despite entering the peak season, attention should be paid to the strengthening trend in the company's fundamentals, such as an increase in the proportion of long-term contracts, rising market share, and stabilization of raw material prices."

In the second quarter, sales and operating profit recorded 75.1 billion KRW and 12.9 billion KRW, up 1% and down 40% year-on-year, respectively. These figures were 4% and 2% below our recently revised estimates. Following a sharp drop in sales in April due to city lockdowns in China, a recovery trend is underway; however, second-quarter sales volume decreased by 8% compared to the previous quarter. The operating rate also fell to 87.4% from the previous quarter. Nevertheless, the effect of price increases starting in March was fully reflected, resulting in sales decreasing by only 4% compared to the previous quarter.

Performance improvement is expected in the third quarter due to the seasonal peak and a decline in raw material prices. With the final North American smartphone customer entering the peak season, third-quarter sales are projected to increase by 3.9% year-on-year and 11% quarter-on-quarter to 83.4 billion KRW. The new 8th production facility will be operational, increasing production capacity from 4,500 tons per year to 5,250 tons. Additionally, after completing COF certification for TVs, full-scale sales are expected, and varnish for substrates is anticipated to be adopted in new foldable phone models from customers in the second half of the year. With the sharp decline in DMF raw material prices starting in June and the full operation of the refining facility, third-quarter operating profit is estimated to increase by 49% quarter-on-quarter to 19.2 billion KRW, with an operating margin of 23.1%.