[Click eStock] "ITM Semiconductor, Electronic Cigarette Demand Recovery Expected... Target Price Down"

On the 25th, KB Securities forecasted that ITM Semiconductor is expected to see growth in e-cigarette performance due to an increase in models adopting protection circuits and the end of the Russia-Ukraine war. However, the target stock price was lowered from 23,000 KRW to 18,000 KRW due to delays in the launch of new e-cigarette devices. The investment opinion was maintained as 'Buy.'

Lee Chang-min, a researcher at KB Securities, explained, "The reason for lowering the target price is to reflect the delay in the launch timing of new e-cigarette devices, which led to a downward revision of the 2025 net income attributable to controlling shareholders from 6.8 billion KRW to 300 million KRW."

ITM Semiconductor's fourth-quarter performance last year recorded sales of 178.6 billion KRW, a 9% increase compared to the same period last year, and an operating loss of 100 million KRW, slightly below the consensus (average securities firm forecast). The researcher analyzed, "Sales declined quarter-on-quarter, which is presumed to be due to de-marketing of protection circuits for some low-profit models of North American customers and a decrease in shipments related to sluggish sales of foldable phones from domestic customers." He added, "In terms of profitability, one-time costs such as disposal of idle assets occurred, but excluding these, it is presumed that a quarterly profit turnaround was possible." For the entire last year, the company recorded a profit of 2.4 billion KRW, successfully returning to profitability for the first time in three years since 2021.

KB Securities expects ITM Semiconductor to turn to an operating profit of 1.8 billion KRW in the first quarter of this year compared to the same period last year. Sales are estimated to increase by 10% year-on-year to 151.9 billion KRW. The researcher explained, "Sales to North American customers are expected to decline quarter-on-quarter due to the off-season effect, but production rates will be maintained at a certain level due to expanded sales to domestic customers."

Growth in e-cigarette performance is anticipated following the end of the Russia-Ukraine war. The researcher stated, "We maintain a positive view on ITM Semiconductor. Regarding protection circuits, sales growth and operating leverage effects are expected due to an increase in the number of models adopted by domestic customers, and a positive spillover effect is also expected from the trend of North American customers' value chain decoupling from China. Although the delay in the launch of new devices by global e-cigarette customers is regrettable, demand recovery in major markets such as Russia and Eastern Europe is expected as the possibility of the Russia-Ukraine war ending expands."