[Click e-Stock] "LX Semicon Faces Prolonged Impact from Client Dualization... Target Price Lowered"

On December 10, IBK Investment & Securities lowered its target price for LX Semicon from 78,000 won to 67,000 won. However, it maintained its buy rating.

Kang Minkoo, an analyst at IBK Investment & Securities, stated, "The negative impact from the dualization within client companies continues," explaining the decision.

In the third quarter, LX Semicon reported sales of 394.4 billion won, down 6.1% year-on-year, and operating profit of 14 billion won, a 59.1% decrease, both falling short of market expectations.

In particular, all products except for the mobile segment experienced negative growth compared to the same period last year. Sales of TV products dropped by 24% year-on-year to 98.6 billion won. The high inventory levels within distribution channels and declining TV demand were cited as the main reasons. Meanwhile, sales in the mobile segment grew by 14% year-on-year. Despite ongoing competition for market share among clients due to strong sales of the iPhone 17 series, the segment continued to post growth.

For the fourth quarter, sales are expected to reach 428 billion won, down 14.8%, with operating profit forecast at 25.6 billion won, a 16.2% decline. Kang noted, "We have lowered both our sales and operating profit forecasts compared to previous estimates, considering the delayed recovery in set demand and the impact of dualization within client companies." He added, "The TV DDI (Display Driver IC), which saw deepened negative growth in the third quarter, is unlikely to see a turnaround even with global sports events scheduled for early next year, due to a long-term decline in demand."

He also analyzed, "It is difficult to expect year-on-year growth for the mobile and IT (information technology) segments at this point, due to the elimination of pre-purchase effects and competition for iPhone 17 series orders with Chinese panel makers."

However, regarding the possibility of a rebound next year, Kang commented, "The gradual increase in the share of OLED within IT products will drive a recovery in both sales and profitability." He added, "The mobile segment is also aiming to improve its market share among clients, and strong sales of the iPhone 17 series are expected to continue into next year."