[Click eStock] "Deoksan Neolux, Weak Performance in First Half of This Year... Target Price Down 6%"

Samsung Securities Report

On the 15th, Samsung Securities maintained its buy rating on Duksan Neolux and set a target price of 48,000 KRW, which is 5.8% lower than the previous target.

In the fourth quarter, the company's consolidated sales amounted to 48.7 billion KRW, and operating profit was 10.1 billion KRW, falling short of market expectations (sales of 48.7 billion KRW, operating profit of 1.1 billion KRW) based on operating profit. The operating margin recorded 20.6%, the lowest level since the third quarter of 2019, which was 19.5%. Jeonghoon Jang, a researcher at Samsung Securities, stated, "This was influenced by tight inventory management by clients due to weakening front-end demand and an increase in selling and administrative expenses related to commission payments."

This year's annual performance is expected to be 182.4 billion KRW in sales and 45.6 billion KRW in operating profit, which are downwardly revised by 17% and 23%, respectively, compared to previous estimates. This is because the inventory adjustment by clients in the fourth quarter is continuing into the first quarter. Although there may be variables due to external circumstances, ahead of the peak season in the second half, expectations for increased OLED volume from the latter half of the second quarter and expansion of OLED volume for notebooks in the second half, along with anticipation for the company's application of black PLD, are expected to revive. Next year, a positive environment is anticipated with the confirmation of the OLED material structure for iPad.

Due to active inventory management by clients amid the slowdown in IT demand, poor performance is expected until the first half of this year. Accordingly, the stock price is also predicted to show a somewhat sluggish trend. However, entering the peak season, an increase in new mobile products, and expansion of IT OLED-applied devices in the second half are expected to confirm growth potential. Researcher Jeonghoon Jang said, "Once the OLED material structure for tablets with a two-stack tandem (a technology stacking two OLED emitting layers) structure for global clients is confirmed, it will secure a premium as a new growth opportunity."