[Click eStock] "Enox Advanced Materials, 1Q Bottom Confirmed, 2Q Recovery Expected"

IBK Investment & Securities maintained a 'Buy' rating on Inox Advanced Materials on the 23rd, setting a target price of 50,000 KRW.

Inox Advanced Materials recorded sales of 81.1 billion KRW in the first quarter, a 1.3% decrease compared to the previous quarter. This was below the forecasted figures. Only the core business unit, Innoled, showed improvement compared to expectations, while the others underperformed. Due to weakness in the mobile sector, Innoflex sales significantly declined. Operating profit for the first quarter was 4.4 billion KRW, which was higher than expected. This is analyzed as a combined effect of profitability deterioration due to decreased sales and the impact of the rising KRW-USD exchange rate.

Researcher Kim Unho of IBK Investment & Securities stated, “It is estimated that the increased proportion of fixed costs due to the decline in operating rate had an absolute impact on the deterioration of profitability.”

However, Inox Advanced Materials' performance is expected to turn to growth from the second quarter of this year. Sales in the second quarter are forecasted to increase by 40% compared to the first quarter. This is because OLED sales, which were sluggish in the first quarter, are expected to rise to 74.9 billion KRW in the second quarter, a 64.8% increase from the first quarter. The mobile sector is also expected to improve somewhat, and large OLED sales are anticipated to increase significantly. Domestic large OLED customer volumes are expected to increase by about 50% in the second quarter compared to the first quarter.

Researcher Kim analyzed, “Benefits from OLED TV volumes are expected, and with a significant increase in new customer volumes anticipated next year, expectations for Inox Lithium will also positively influence the future stock price direction.”