[Click eStock] Enox Advanced Materials, Lack of Stock Momentum... A Buying Opportunity if Considered Next Year

[Asia Economy Reporter Lee Seon-ae] Hana Securities announced on the 2nd that it maintains a Buy rating and a target price of 70,000 KRW for InnoX Advanced Materials. The target price was calculated by applying a 12-month forward earnings per share (EPS) and the average year-end price-to-earnings ratio (PER) of 13.6 times over the past five years.

Kim Hyun-soo, a researcher at Hana Securities, stated, "Although the second half is a period of quarterly profit decline and the absence of stock price momentum is a fact, we believe it is a phase where maximizing expected returns through phased buying is possible," adding, "If you can wait until 2023, it is a strong buying opportunity."

Hana Securities reflected the production cut movements of domestic panel makers for OLED TVs and smartphone panels by revising down InnoX Advanced Materials' 2022 revenue and operating profit forecasts by 4% and 3%, respectively, and the 2023 revenue and operating profit forecasts by 6% and 9%, respectively, compared to previous estimates. However, the investment opinion and target price were maintained by reflecting the elapsed time since the target price calculation and the structurally high-margin portfolio due to the increase in the proportion of high-profit sales.

Despite the decrease in OLED film sales due to sluggish OLED TV sales and the decline in CCL sales due to weak Galaxy A sales, considering the increase in sales of QD films for Samsung Display, new films for major new Chinese customers, and films for foldable smartphones, it is judged that operating profit exceeding 130 billion KRW can be achieved in 2023.

Researcher Kim said, "While general display material companies have improved profitability over the past two years due to leverage effects from price and utilization rate increases, InnoX Advanced Materials has shown profitability improvement due to the scrapping of low-margin business units and an increase in the sales proportion of high-margin business units, which suggests that maintaining the current operating profit margin is possible in the mid to long term," emphasizing, "Currently, with a 12-month forward PER of 7 times, it is judged to be in an extremely undervalued phase."