[Click eStock] "LX Semicon, Gradual Recovery Amid IT Demand Uncertainty"

There is a forecast that LX Semicon's performance will gradually recover. It is analyzed that uncertain IT demand will be offset by sales in China and other factors.

On the 7th, Hyundai Motor Securities set LX Semicon's target stock price at 80,000 won based on this background. This is a 22.3% downward adjustment from 103,000 won on November 24 last year. The investment opinion 'Buy' was maintained.

Last year, the monopoly structure was broken as Taiwan's Novatek emerged as a competitive supplier in the display driver IC (DDI) sector. The first quarter performance this year is expected to be sales of 444 billion won and operating profit of 40 billion won. Sales are expected to decrease by 3.1% and operating profit by 13.5% compared to the same period last year. It is explained that the decline in performance is inevitable due to the seasonal impact of small-sized DDIs. However, it is expected that the seasonal impact can be somewhat offset by the expansion of mid-to-low-end smartphone product lines of customers in mobile products.

In large-sized DDIs, sales for TV and IT are expected to slightly recover due to proactive panel inventory acquisition before the Trump tariffs were imposed and the effect of subsidies in China. In the case of mobile, the proportion of sales in China is very low, and performance may decline due to entering the seasonal off-season.

Thermal substrates are expected to generate mass production sales from the second quarter, but the scale is considered small. However, future growth potential is viewed positively if collaboration with domestic automobile OEM customers and others is achieved.

Kim Jong-bae, a researcher at Hyundai Motor Securities, said, "Despite the entry of competitors last year, operating profit grew by 30% compared to the previous year," adding, "As IT demand from China recovers and mobile volume has bottomed out, the earnings growth trend is expected to continue this year."