[Click eStock] "PI Cheomdan Sosae, Profitability Recovery from Q3... Target Price Downgraded"

[Asia Economy Reporter Hwang Yoon-joo] Ebest Investment & Securities forecasted on the 26th that PI Advanced Materials' profitability will recover starting from the third quarter, unlike the sluggish second quarter. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 56,000 KRW.

Nam Dae-jong, a researcher at Ebest Investment & Securities, stated, "We estimate third-quarter sales to increase by 17.4% year-on-year to 94.2 billion KRW, while operating profit is expected to decrease by 23.2% to 23.6 billion KRW." Although operating profit declines compared to the same period last year, it represents an 82.6% increase compared to the previous quarter.

Researcher Nam analyzed, "The increase in shipment volume (+23.6%) due to the seasonal peak and the effect of price hikes will be fully reflected from the third quarter, and the expansion of production capacity (Capa) for recycling the key raw material dimethylformamide (DMF) will help operating profit margin recover to the mid-20% range."

He also predicted, "The operation of new PI film capacity for advanced industries (EV, display, etc.) will begin in the second half, and performance will show an upward trend starting from the third quarter."

Nam explained the reason for lowering the target price as "due to the weak second-quarter performance and the downward revision of the 2022 earnings forecast caused by the slowdown in front-end IT demand."

He added, "We expect market dominance to be strengthened through business expansion in growth industries such as electric vehicles and flexible displays, and aggressive capacity investment, which is unique in the industry. Since profitability will significantly improve from the second half through price increases and cost reductions, we maintain the 'Buy' investment rating."

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