[Click eStock] "InnoX Advanced Materials, Growing Alongside OLED TV Expansion"

Increased Operating Rate Expected to Lead to Profitability Improvement
Shinhan Investment Corp. "InnoX Advanced Materials Target Price Raised from 46,000 KRW to 55,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Innocean Advanced Materials is expected to exceed market consensus forecasts thanks to the growth of organic light-emitting diode (OLED) TVs. In particular, securities firms predict that profitability will also improve as the operating rate increases.

On the 29th, Shinhan Financial Investment estimated Innocean Advanced Materials' third-quarter sales this year to be 133.4 billion KRW, up 26.1% from the same period last year, and operating profit to be 29 billion KRW, up 49.4% during the same period. This exceeds the consensus for sales and operating profit of 128.6 billion KRW and 25.3 billion KRW by 3.73% and 14.62%, respectively.

(Provided by Shinhan Financial Investment)

The increase in demand for materials in the OLED TV sector is expected to have a positive impact on performance. With strong OLED TV shipments, sales in the Innoled division are expected to reach 75 billion KRW, driving Innocean Advanced Materials' performance. The sales proportion of the Innoled division was only 37.1% in 2019 but is projected to expand to 46.5% in 2020 and 57% this year.

The increase in operating rate is also expected to affect profitability improvement. Due to the characteristics of the specialty film industry, the higher the operating rate, the greater the operating leverage maximization. Accordingly, Shinhan Financial Investment forecasted Innocean Advanced Materials' third-quarter operating margin to be 21.8%. This would be the first time quarterly operating margin surpasses 20%.

Sales in the Smartflex division are estimated at 24.4 billion KRW. Demand for laptops and tablets is continuously recovering, and sales of magnetic films for digitizers that recognize pen movements are also growing. Hwang Seong-hwan, a researcher at Shinhan Financial Investment, said, “We are creating an ecosystem centered on front-end customers for tablets, laptops, and foldables, and continuous benefits from films for digitizers are expected.”

Accordingly, Shinhan Financial Investment maintained a “Buy” rating on Innocean Advanced Materials. The target price was raised from the previous 46,000 KRW to 55,000 KRW. The closing price on the previous day was 36,300 KRW.

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