[Click eStock] "PI Advanced Materials, Earnings Decline Due to Mobile Demand Drop... Target Price Down 11.6%"

2024·2025 Performance Outlook Downgraded
Q4 Sales Expected to Decline by 10%... Conservative Approach Recommended
Demand Decrease in EV and Secondary Battery Sectors, Uncertain Outlook for Next Year

On the 4th, BNK Investment & Securities revised down the 2024 and 2025 earnings per share (EPS) of PI Advanced Materials by 37% and 39%, respectively. The target stock price was also lowered by 11.6% to 22,000 KRW. The investment rating of "Hold" was maintained. The closing price of PI Advanced Materials on the previous trading day was 19,710 KRW.

Minhee Lee, a researcher at BNK Investment & Securities, stated, "Although there is a possibility of improvement in mobile demand in the Greater China region after early next year, it is necessary to take a conservative approach until concrete signs of recovery are confirmed."

According to BNK Investment & Securities, the third-quarter performance fell short of market expectations due to decreased demand in the mobile market and a slowdown in demand from advanced industries. Sales recorded 70.7 billion KRW, a 4% decrease from the previous quarter but a 15% increase compared to the same period last year. Operating profit was 12.1 billion KRW, down 32% from the previous quarter but up 185% year-over-year.

Among major products, the heat dissipation sheet segment recorded 26.6 billion KRW, a 57% increase year-over-year, exceeding expectations. However, sales in this segment fell short of expectations due to decreased FPCB demand from major North American customers. In the advanced industry sector, sales of EV and secondary battery films plunged 34%, negatively impacting overall sales. As a result, the product mix deteriorated, causing the operating profit margin to drop to 17.1%.

The outlook for the fourth quarter is also somewhat bleak. Due to decreased smartphone demand in North America, heat dissipation sheet sales are expected to decline by about 25%. Additionally, with the slowdown in EV demand delaying projects from battery customers, sales of films for advanced industries are also expected to be sluggish. Accordingly, fourth-quarter sales are projected to be approximately 63.5 billion KRW, a 10% decrease from the previous quarter, with the operating profit margin expected to fall to 11.4%.