[Click eStock] "Wiseol, Front Demand Weakness... Target Price Downgrade"

[Asia Economy Reporter Hwang Yoon-joo] Hi Investment & Securities stated on the 31st that despite sluggish front-end demand, Wysol is facing increased cost burdens due to internal and external factors. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 11,000 KRW.

Ko Eui-young, a researcher at Hi Investment & Securities, analyzed, "The prolonged poor performance and stock price decline continue."

Researcher Ko cited "weak smartphone shipments" as the cause of the poor performance. He explained, "50% of the company's sales are to Samsung Electronics, and the remaining 50% are to Chinese companies such as OVX. All are experiencing shipment declines, and it is understood that sales of single products, which have higher profitability compared to modules, have shrunk."

Secondly, he expressed concerns about the burden of raw material costs. Researcher Ko diagnosed, "Half of the raw material purchase amount is ICs, and the related cost burden has remained high since the third quarter of last year."

He also pointed out, "After large-scale Capex execution related to line expansion and new filters, the burden of depreciation expenses has increased."

Accordingly, the third-quarter performance is expected to be poor.

Researcher Ko predicted, "Third-quarter sales will decrease by 13.5% year-on-year to 84.6 billion KRW, and operating loss will turn to a deficit of 1.7 billion KRW."

He evaluated, "Domestic customers plan to gradually increase production from September after inventory adjustments until August, but the sluggishness of Chinese customers is prolonged," adding, "It is a continuous series of disappointments in many ways."

He added, "We look forward to 2023, when the business environment is expected to normalize and the company's fundamentals improve."

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