[Click eStock] "ITM Semiconductor, Q4 Deferred Sales Reflected, Forecasting Record Performance"

[Asia Economy Reporter Eunmo Koo] KB Securities expects ITM Semiconductor to perform poorly in the third quarter of this year due to delays in the launch of flagship smartphones by North American clients caused by the impact of COVID-19. However, it forecasts an improvement in performance in the fourth quarter as deferred sales are reflected.

On the 25th, researcher Changmin Lee of KB Securities stated in a report that ITM Semiconductor's third-quarter sales this year are expected to be 111 billion KRW, down 22% from the same period last year, and operating profit is expected to be 14.3 billion KRW, down 40%, falling short of market consensus. Lee explained, "This is because the launch of flagship smartphones by North American clients has been delayed due to the impact of COVID-19," adding, "As a result, related sales are only partially reflected in the third quarter, and despite an increase in penetration within client companies, poor performance is expected compared to the same period last year."

However, with the reflection of deferred sales, the fourth-quarter performance is expected to improve significantly. KB Securities estimates fourth-quarter sales to grow 71% year-on-year to 219.4 billion KRW, and operating profit to increase 176% to 38.5 billion KRW, marking the highest performance ever. Lee explained, "This is because sales related to flagship smartphones of North American clients will be fully reflected, and the removal of bundled earphones from major clients' new smartphone models is expected to stimulate demand for wireless earphones."

Annual performance this year is estimated at 476.8 billion KRW in sales, a 20% increase from last year, and 61.8 billion KRW in operating profit, a 15% growth. Lee said, "Despite the impact of COVID-19, performance growth is expected to continue, and in 2021, significant external growth is anticipated due to the launch of new wireless earphone products by North American clients and increased smartphone penetration."

The core investment points are still considered valid. ITM Semiconductor's stock price has fallen about 20% from its previous high due to short-term poor performance, concerns over decreased smartphone sales by North American clients amid US-China conflicts, and the possibility of price increases for flagship smartphones by North American clients acting as negative factors. However, Lee analyzed, "Steep performance growth is expected to continue after the fourth quarter, North American clients' market share in the Chinese smartphone market has actually increased since the US-China conflict intensified, and considering the clients' strategy to expand software and wearable sales and efforts to reduce costs, the possibility of price increases for new products is low. Therefore, ITM Semiconductor's core investment points remain valid."

This content was produced with the assistance of AI translation services.