[Click eStock] "Rino Gong-yeop, Worse-than-Expected Second Half Performance... Target Price Down"

Target Stock Price Revised Down from 300,000 Won to 210,000 Won

On the 4th, Kiwoom Securities downgraded the target price of Rino Industrial from 300,000 KRW to 210,000 KRW, citing expectations that the company's performance in the second half of this year will fall short of expectations. The investment rating was maintained as 'Buy.'

Park Yu-ak, a researcher at Kiwoom Securities, explained, "Rino Industrial's second-half performance is expected to fall short of previous forecasts due to the underwhelming launch of AI smartphones, weak demand for consumer devices, and inventory adjustments by major clients. We lowered the target price reflecting the revised earnings forecasts for 2024-2026 due to weak demand. However, the investment rating is maintained considering the stock price deviation."

Kiwoom Securities estimates Rino Industrial's Q4 performance this year to show a 21% increase in sales to 70.3 billion KRW and a 5% rise in operating profit to 31.8 billion KRW compared to the same period last year. Researcher Park said, "Rino Industrial's Q4 performance is expected to grow compared to the previous quarter and the same period last year. This is because the intensity of inventory adjustments by major clients is easing, leading to a recovery in Rino Industrial's sales volume compared to the previous quarter, and high value-added new businesses such as AI and high-bandwidth memory (HBM) are also expected to perform well."

Although Q1 performance next year is expected to decline compared to the previous quarter, it is projected to enter a quarterly growth trend thereafter. Park forecasted, "Q1 sales are expected to decrease by 18% from the previous quarter to 57.8 billion KRW, and operating profit to drop by 24% to 24.3 billion KRW, but after that, with the launch of on-device AI smartphones and PCs, the release of proprietary AI chips by cloud service providers (CSPs), and a turnaround in the secondary battery industry, quarterly earnings growth is expected to begin."

However, there are forecasts that the stock price may continue to weaken for a while due to the poor Q1 performance next year. Researcher Park stated, "Rino Industrial's stock price has been under continuous adjustment since May due to weak front-end demand and a decline in investment sentiment in the semiconductor sector. While the stock price may remain weak for some time due to poor Q1 performance next year, it should not be overlooked that Rino Industrial's growth story centered on AI, autonomous driving, and the secondary battery industry remains valid."