[Click eStock] Inox Chems, Target Price Up Due to Rapid Increase in OLED Proportion

[Asia Economy Reporter Lee Seon-ae] Mirae Asset Securities announced on the 27th that it maintains a 'Buy' rating on Inox Advanced Materials and raises the target price from the previous 70,000 KRW to 82,000 KRW. This reflects the continued application of a target price-to-earnings ratio (PER) of 15 times to the 12-month forward earnings per share (EPS). The EPS estimates for this year and next year have been revised upward by +17% and +9%, respectively, compared to previous estimates.

Researcher Kim Cheol-jung of Mirae Asset Securities analyzed, "A gradual multiple rerating is expected going forward, driven by the shift away from the slow-growing smartphone parts sector toward higher growth OLED and foldable sales and profit shares."

This year, OLED material sales are expected to increase by 18% due to the early operation effect of new customer production lines. Smartphone sales are also projected to rise by 19%, as sales of new foldable-related products are expected to accelerate.

Inox Advanced Materials' second-quarter sales and operating profit are forecasted at 113.2 billion KRW (+18% QoQ) and 15.6 billion KRW (+15% QoQ), respectively. These figures represent upward revisions of +23% for sales and +31% for operating profit compared to previous estimates. The sales upgrade is based on new products for WOLED and foldable products.

Researcher Kim explained, "The operating rate of WOLED materials is expected to rise from 80% in the first quarter to 91% in the second quarter," adding, "We anticipate an operating leverage effect from the increased utilization rate, and profitability will gradually improve." He further noted, "Sales of new materials for Samsung Electronics' foldable products are also expected to begin in earnest in the second quarter."

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