[Click eStock] "PI Cheomdansojae, Performance Improvement Accelerates from Q2... Target Price Up"

Target Price Raised from 28,000 Won to 33,000 Won

NH Investment & Securities raised the target price for PI Advanced Materials from 28,000 KRW to 33,000 KRW on the 8th, anticipating a full-scale recovery in performance starting from the second quarter of this year. The investment rating was maintained at 'Buy.'

Lee Kyu-ha, a researcher at NH Investment & Securities, explained, "Considering the improvement in demand for smartphones, the front-end industry, and the completion of inventory adjustments, we raised the earnings forecast and adjusted the target price upward. Since there is a high possibility of additional sales improvement in the second half for our clients in North America and Greater China smartphone markets, we maintain the 'Buy' rating."

PI Advanced Materials recorded sales of 51.87 billion KRW and an operating profit of 2.47 billion KRW in the first quarter. Sales increased by 21.5% compared to the same period last year, and operating profit turned positive. Although the first-quarter results fell short of market expectations, the second-quarter performance is expected to significantly exceed market forecasts. The researcher said, "Due to the continued sales slowdown of North American clients and inventory adjustments, the first-quarter operating profit fell below consensus (average securities firm forecast). However, in the second quarter, operating profit is expected to reach 12.5 billion KRW, greatly surpassing market expectations, driven by increased volume in China and higher operating rates."

PI Advanced Materials experienced poor performance last year due to the slowdown in smartphone market demand and inventory adjustments by clients, but it is understood that the excessively adjusted inventory levels have been gradually normalizing since the second quarter. It is expected that operating rates and margins will improve in the second half, supported by the recovery in sales. The researcher stated, "Considering these factors, we forecast this year's operating profit to rise by 26.5% from the previous estimate to around 39.7 billion KRW. If smartphone demand continues to improve due to the expansion of on-device artificial intelligence (AI) and replacement demand, a gradual recovery in profit margins will be possible."

In the mid to long term, diversification of sales channels is expected. The researcher predicted, "In the mid to long term, through synergy with the parent company Akema, sales channels will diversify into electric vehicle (EV) battery insulation tapes, automotive electronics, aerospace, and other sectors, reducing dependence on smartphones."