[Click eStock] "Innocean Target Price Maintained at 29,700 Won"

Meritz Securities maintained its target price of 29,700 KRW and a buy rating for Innocean on the 14th.

The consolidated gross profit and operating profit for the third quarter are expected to be 222.5 billion KRW and 41.9 billion KRW, respectively, in line with market consensus. Domestically, gross profit is expected to increase by 4.2% year-on-year to 51 billion KRW, driven by new car agency effects from Kia EV3 and Hyundai Casper EV. Overseas, gross profit is projected to reach 172 billion KRW, supported by growth in Europe and the Americas. However, following recent AI alliance agreements signed with 10 domestic and international AI companies including Saltlux and Adobe for AI collaboration, IT personnel increased in the first half of this year, leading to an expected selling and administrative expense of 180.3 billion KRW in the third quarter.

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This year, consolidated gross profit is forecasted at 921.8 billion KRW and operating profit at 155.1 billion KRW. In the fourth quarter, the advertising campaigns for Ioniq 7 following Ioniq 6 and the full model change promotion for Palisade are expected to continue driving new car campaign agency effects. This year, headquarters gross profit is expected to increase by 6.4% year-on-year, and overseas gross profit is also projected to grow by 9.2% year-on-year, supported by growth in Europe and the Americas.

Although the burden of selling and administrative expenses increased due to proactive workforce expansion in the first half, further increases in labor costs are expected to be limited. Researcher Jeong Jisoo of Meritz Securities said, "Goodwill amortization related to Welcom, which was recorded at 18.3 billion KRW and 19.5 billion KRW in the fourth quarters of 2022 and 2023 respectively, is expected to decrease to around 14.2 billion KRW in 2024, contributing to net profit improvement."

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