[Click eStock] "Patron, Q2 Earnings Hit Bottom"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating on Patron on the 3rd and set a target price of 11,500 KRW, down 13.3% due to weak second-quarter earnings.

Patron's operating profit in the second quarter was 8.04 billion KRW, down 45% year-on-year. This figure fell short of the market expectation of 11.2 billion KRW. Sales recorded 284.1 billion KRW, a 5% decrease compared to the same period last year.

Researcher Kangho Park of Daishin Securities explained, "This is because sales of camera modules to Samsung Electronics decreased," adding, "Samsung Electronics' smartphone sales were 62.08 million units, down 16.4% from the previous quarter, with the Galaxy A series experiencing a relatively larger decline in sales compared to premium models."

However, the positive aspect is that sensor sales (41.8 billion KRW) increased by 28.3%, and new sales of 10 billion KRW were generated from electronic cigarettes. Sales to the automotive electronics sector also steadily increased, indicating valid growth in new business areas.

Accordingly, operating profit for the third quarter is expected to increase by 39.1% from the second quarter to 11.2 billion KRW. Samsung Electronics' smartphone sales are forecasted to gradually improve from the second quarter low. Researcher Park said, "We believe the global smartphone market is moving out of stagnation and into a recovery phase rather than experiencing full-scale growth," adding, "Samsung Electronics will focus on securing competitiveness centered on premium models in the second half of this year, including expanding foldable phone sales and the early launch of the 2023 Galaxy S23."

Increased orders are also expected in sensor sales for wearables, camera modules for automotive electronics, and the LED market. Researcher Kangho Park analyzed, "By reducing the proportion of smartphone camera modules and expanding sales in new growth business sectors such as entering the electronic cigarette market, continuous growth will be pursued."