[Click eStock] "Amotech Lowers Profit Forecast for Next Year... Target Price Down"

"Decrease in Shipments of Multilayer Ceramic Capacitors (MLCC)"

Ebest Investment & Securities on the 21st downgraded the target price of Amotech to 12,000 KRW, stating that "due to the decline in shipments of multilayer ceramic capacitors (MLCC), the earnings outlook for next year has been lowered." The buy rating was maintained.

Researcher Kim Kwang-soo of Ebest Investment & Securities said, "The Q3 performance showed sales of 47.8 billion KRW, down 8.4% compared to the same period last year. Operating profit decreased by 4.4 billion KRW, continuing a deficit," adding, "Expectations for a short-term earnings upgrade are limited."

First, the antenna module business segment's performance was weak. Overall sales of major clients such as Samsung Electronics' Galaxy S series and entry-level models were sluggish. Fixed cost burdens also continued. Inventory adjustments of MLCC by Chinese global electric vehicle companies and yield and process improvements of products resulted in shipments falling short of planned volumes. However, the electric vehicle motor segment, which is showing clear external growth, appears to be maintaining a profitable trend.

Q4 performance is expected to see sales of 51 billion KRW, down 9.7% from the same period last year, and operating profit is forecasted to decrease by 3.15 billion KRW compared to the same period last year. The resumption of MLCC supply to Chinese global electric vehicle companies and direct transactions with North American electric vehicle companies (supplying MLCCs for existing camera modules, wireless charging, tires, etc.) are expected to be postponed until next year. Researcher Kim noted, "As of now, MLCC sales occur in the telecommunications product business. Major customers are Samsung Electronics' domestic network division and China's ZTE, with sales expected to be around 10 billion KRW this year."

He added, "Expectations for MLCC business expansion remain valid," and "Domestic telecommunications equipment customer volumes are increasing. We are testing the quality of major products and have started direct transactions with North American customers by leveraging know-how in high-voltage products in materials and process stages and a strategy of small-lot, multi-product production."