[Click eStock] "Iljin Materials, This Year's Earnings Estimates Down... Target Price Down"

[Asia Economy Reporter Hwang Yoon-joo] Samsung Securities evaluated Iljin Materials on the 17th, stating that its operating profit fell short of market expectations for two consecutive quarters. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 90,000 KRW.

Researcher Jang Jung-hoon of Samsung Securities stated, "The consolidated sales for the third quarter were 169.7 billion KRW, and operating profit was 22.9 billion KRW, both below market expectations."

Researcher Jang explained, "Sales in the Elecfoil division decreased by 8.7% compared to the previous quarter, mainly because the ICS division for mobile and semiconductor customers declined by 30% quarter-on-quarter due to inventory adjustments by clients." Additionally, the construction subsidiary's orders decreased both quarter-on-quarter and year-on-year due to conservative order intake.

However, the Malaysian battery foil division saw a significant improvement in margins from the mid-teens of 10% in the previous quarter to 25%, due to productivity improvements, exchange rate increases, and temporary profit improvements from LME price declines.

Regarding the full-year performance, Researcher Jang stated, "We are revising down our estimates by 15% to sales of 769.7 billion KRW and operating profit of 97.2 billion KRW," reflecting price declines due to lower raw material prices and a delayed full operation of the Malaysian plant. He added, "For 2023, we lowered sales to 1.18 trillion KRW and operating profit to 152.9 billion KRW, a 3% reduction."

According to the company, starting from the fourth quarter, they are preparing a mass production line for the I2S product at the Iksan plant in Korea, which has better 'high elongation' and 'high strength' characteristics compared to conventional general-purpose battery foil. Expansion of volume is expected mainly from European customers.

Researcher Jang evaluated, "The I2S product can also be applied to 4680 products and is expected to increase production speed even with existing processes. However, since the order size and timing have not been determined, it is premature to reflect its contribution to performance in the estimates."