[Click eStock] "Inox Chemdesign, Valuation Appeal Highlighted"

Kiwoom Securities analyzed on the 15th that Innox Advanced Materials stands out in valuation attractiveness even excluding new businesses.

Kim Sowon, a researcher at Kiwoom Securities, explained in a report on the same day, “The first quarter performance this year showed sales of 81.1 billion KRW and operating profit of 4.4 billion KRW, falling short of market expectations,” adding, “Inventory adjustments continued due to sluggish demand in mobile and semiconductor sectors, resulting in Innoflex, Smartflex, and Innosem sales all underperforming compared to forecasts.”

Researcher Kim Sowon analyzed, “However, the Innoled division’s sales increased by 4% compared to the previous quarter, exceeding expectations. This was because, despite weak demand for flexible OLED, sales for OLED TVs rose by 52% quarter-on-quarter, leading to a recovery in inventory accumulation demand.”

Operating profit for the second quarter is expected to be 12.5 billion KRW, in line with market expectations. Researcher Kim said, “With inventory adjustments coming to an end and customers entering the peak season in the second half, inventory accumulation demand is expected to expand, leading to performance growth across all divisions compared to the previous quarter,” and forecasted, “The operating profit margin for the second quarter will also improve to 12%, supported by increased utilization rates and mix improvement.”

Furthermore, he explained, “Innox Advanced Materials recently announced plans to enter a new business processing low-purity lithium carbonate into lithium hydroxide,” adding, “They plan to initially expand two production lines with a total capacity of 40,000 tons, with the first production line scheduled for full-scale mass production starting from the third quarter of 2025.”

He analyzed, “Since the announcement of the new business, the current stock price has fallen to a 12-month forward P/B of 1.6 times and P/E of 9.9 times,” noting, “This level does not reflect any value from the new business and is significantly undervalued compared to other companies operating in the lithium business, as well as falling below the company’s past average valuation.”

He continued, “In particular, with expectations for LG Display’s WOLED new customer acquisition, which had been delayed, the valuation attractiveness stands out even based solely on the core business value,” and added, “We recommend increasing the weighting of the company, which holds momentum in both its core and new businesses as well as valuation attractiveness.”