[Click eStock] "Sungil Hightech, Continued Growth and Profitability Recovery Expected"…Target Price Up

On the 19th, Eugene Investment & Securities reflected expectations of continued earnings growth and profitability recovery for Seongil Hightech, maintaining a buy rating and raising the target price from 162,000 KRW to 183,000 KRW.

Seongil Hightech's consolidated sales for the first quarter of this year amounted to 81.5 billion KRW, a 58.2% increase compared to the same period last year, and operating profit was 11.7 billion KRW, up 16.8%. Sales exceeded market expectations by a significant 21.7%, while operating profit was at a similar level.

Researcher Park Jong-sun of Eugene Investment & Securities explained, "The large increase in sales was driven by a 388.4% and 69.5% year-on-year increase in sales of lithium and nickel, respectively, which led the earnings growth. However, the relatively modest increase in operating profit compared to sales growth is due to a sharp decline in the selling prices of key products such as lithium and nickel."

He added, "Recently, market prices for key products have stabilized, which is positive. Our estimated second-quarter earnings forecast is sales of 95.2 billion KRW and operating profit of 13 billion KRW, representing a 28.6% increase in sales and a 29.2% decrease in operating profit compared to the same period last year."

He further noted, "The conservative estimate of operating profit despite sales growth is due to the expected decline in selling prices following the drop in market prices of key products."

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