[Click eStock] "Enox Advanced Materials, Long-term Momentum Remains Despite Global IT Demand Weakness"

[Asia Economy Reporter Kwon Jaehee] Kiwoom Securities maintained a 'Buy' rating on InnoX Advanced Materials on the 2nd, while lowering the target price to 65,000 KRW.

InnoX Advanced Materials posted Q2 results with sales of 142.9 billion KRW and operating profit of 32.2 billion KRW. This represents increases of 32% and 62% respectively compared to the same period last year, meeting the heightened market consensus.

Researcher Kim Sowon of Kiwoom Securities analyzed, "Despite the overall sluggish global IT demand, the company recorded solid results by expanding market share within its customers, and even during the seasonal off-season, it demonstrated high profitability through efficiency improvements in relatively low value-added business units."

In particular, InnoX Advanced Materials' core business unit, the Innoled division, achieved record-high performance by expanding market share despite weak OLED TV panel shipments from customers.

Net profit reached 34.6 billion KRW, significantly exceeding expectations, which appears to be due to increased foreign exchange gains and tax deductions related to employees' stock option exercises.

For the upcoming Q3, results are expected to fall short of market expectations, with projected sales of 149.2 billion KRW and operating profit of 32.1 billion KRW. Sales are likely to be affected by restructuring in the Innoflex division and weakness in the smartphone market. Additionally, downward revisions in customers' OLED TV panel shipment forecasts are expected to impact performance. However, expansion of market share within customers is anticipated to partially offset the effects of weak demand. Operating profit margin is also expected to slightly decline to 21.5% compared to the previous quarter due to the strong price of nickel, a major raw material.

Researcher Kim stated, "Nevertheless, maintaining a stable operating profit above 20% since Q3 last year proves the company's solid fundamentals. Reflecting this, this year's performance is expected to show robust results with sales of 547.1 billion KRW and operating profit of 129.2 billion KRW despite the sluggish global IT demand."

He added, "Although short-term momentum is weak, mid- to long-term momentum is expected to continue, so we maintain a 'Buy' rating."

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