Kiwoom Securities analyzed on the 25th that PI Advanced Materials is facing increased short-term earnings uncertainty due to slower-than-expected recovery in smartphone demand. The investment rating was maintained at 'Buy,' but the target price was lowered from 51,000 KRW to 43,000 KRW.
PI Advanced Materials recorded sales of 60.2 billion KRW and an operating profit of 2.5 billion KRW in the second quarter, representing decreases of 20% and 81% respectively compared to the same period last year. So-won Kim, a researcher at Kiwoom Securities, explained, "Although the company succeeded in turning a profit compared to the previous quarter, it fell short of the heightened market expectations. The operating profit margin was below expectations due to the impact of product mix and reflected losses from operational downtime."
Kiwoom Securities expects PI Advanced Materials to record sales and operating profit of 68.7 billion KRW and 6.2 billion KRW respectively in the third quarter, down 2% and 56% year-on-year. These results are below market expectations. Kim analyzed, "Thanks to the seasonal peak effect and increased operating rates, sales and profitability are expected to improve compared to the previous quarter. However, uncertainty in global smartphone demand, including in the Greater China region, continues, and the extent of earnings improvement is expected to be weaker than anticipated."
However, growth is expected to become more prominent starting next year. Kim emphasized, "The benefits from the IRA, which will be fully realized from 2024, and the synergy effect with Arkema are expected to further solidify mid- to long-term growth potential."
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