[Click eStock] "Doosan Tesna, Target Price Downgraded"

Shinhan Investment Corp. lowered the target price for Doosan Tesna to 61,000 KRW on the 5th, while maintaining a buy rating.

Doosan Tesna recorded sales of 85.7 billion KRW and operating profit of 13.4 billion KRW in the fourth quarter of last year, falling short of estimates. Due to mobile seasonality, sales of mobile AP and CIS grew compared to the previous quarter. In fact, effects from major clients’ adoption of their own APs and product mix improvements were also observed. However, performance was somewhat sluggish due to weak sales of automotive SoCs and increased depreciation expenses from Capex execution. The reason for the weak automotive SoC performance in Q4 was not a slowdown in the upstream industry growth but a short-term volume decrease caused by clients’ efforts to improve automotive SoC processes.

First-quarter results this year are expected to be sales of 86.1 billion KRW and operating profit of 13.7 billion KRW. Contrary to Q4 last year, automotive SoC products are expected to drive Q1 performance. Clients have completed efficiency processes for automotive SoC process improvements, and the operating rate of automotive SoCs has started to rise again. Additionally, the volume of automotive SoCs received from clients this year is increasing, which may lead to market share expansion. Although the growth rate of the electric vehicle market is slowing this year, it is still expected to show a higher growth rate compared to mobile performance.

There is a high possibility of portfolio expansion due to recognition of automotive CIS sales in the second half of this year. As penetration rates of autonomous driving levels 2 and 3 increase, the number of installed CIS is expected to rise, increasing demand volume. Researcher Namgung Hyun of Shinhan Investment Corp. analyzed, "In fact, major clients are focusing on orders for automotive semiconductors, and due to diversification of the supply chain by automakers, a trickle-down effect on automotive CIS volumes is expected."