[Click eStock] "Sekonix, Customer Order Volume Expected to Decline from Q4"

Meritz Securities on the 23rd downgraded its earnings estimates for Sekonix for next year, reflecting a decrease in volume from Tier 1 suppliers, and lowered the target price from 10,000 KRW to 9,500 KRW. However, the buy rating was maintained.

Sekonix's consolidated sales for the third quarter of this year increased by 16.5% year-on-year to 133.2 billion KRW, and operating profit turned positive to record 4.6 billion KRW. These figures exceeded market consensus estimates by 11.5% and 16.3%, respectively.

Researcher Yang Seung-su of Meritz Securities explained, "Sales of automotive cameras and lenses recorded 63 billion KRW and 42.3 billion KRW, respectively, continuing growth due to increased option adoption rates and the reflection of backlogged orders from last year's automotive semiconductor supply shortage. Mobile also performed better than expected due to increased supply of mid-to-low-end products. Although there was continued pressure from exchange rates on profitability, solid revenue growth helped maintain favorable profitability."

Fourth-quarter sales and operating profit are projected at 124.4 billion KRW and 3.6 billion KRW, respectively. From the fourth quarter, a decrease in volume from Tier 1 customers and inventory adjustments are expected to impact automotive cameras and lenses. Additionally, backlogged orders caused by the automotive semiconductor supply shortage are understood to have been fulfilled as of last month. However, stabilization of exchange rates and performance defense in the headlamp segment are expected to enable profitability to be maintained at the first half level.

Researcher Yang added, "While the expansion of headlamp sales is expected to partially offset the impact, the volume decrease from Tier 1 suppliers is anticipated to continue into 2024. Nevertheless, at the current stock price, it is necessary to focus on the upside potential, which remains open due to expectations for expansion of the automotive sensor product lineup or acquisition of additional customers."