[Click e-Stock] "PI Advanced Materials: Annual Profit Expected to Rise Despite Sluggish Thermal Management Sheet Sales"

Samsung Securities: "Impact of Price Increases and Product Mix Improvements"

On July 28, Samsung Securities lowered its target price for PI Advanced Materials from 31,000 won to 28,000 won, but maintained its "Buy" investment rating. This reflects expectations that annual profits will grow despite sluggish sales of thermal management sheets.

Jang Jeong-hoon, a researcher at Samsung Securities, explained, "The adjustment was made because the 12-month forward EPS (earnings per share), which is used to calculate the target price, has been lowered by 7.6%." He added, "We are maintaining our 'Buy' rating because we believe the current share price is significantly undervalued, trading at 10.6 times the 2026 price-to-earnings ratio (PER), which is very low compared to industry peers."

PI Advanced Materials reported sales of 77.5 billion won and operating profit of 22.9 billion won for the second quarter. This exceeds the market consensus for operating profit, which stood at 20 billion won according to FnGuide. Notably, the second quarter operating profit margin (OPM) was 29.6%, the highest since the second quarter of 2014 (33.6%). Researcher Jang explained, "The strong profitability was driven not only by improvements in the product mix but also by price increases in the mid-to-high-10-percent range due to heightened geopolitical risks in the second quarter, while cost increases for raw and subsidiary materials were relatively lagged, leading to improved margins."

This year's annual sales are expected to come in at 297.3 billion won, down 4% from the previous estimate, while annual operating profit is projected to be similar to the previous forecast at 70.6 billion won. Although demand for thermal management sheets was sluggish, the outlook for future profit growth remains positive. Researcher Jang commented, "Due to 'chipflation' stemming from the Middle East war, Chinese companies have become more cautious in purchasing, and competition among suppliers has intensified, causing second-quarter thermal management sheet sales to decline by 20% year-on-year. Demand in the Chinese thermal management sheet market is also expected to remain challenging in the second half."

He added, "While annual thermal management sheet sales are likely to fall to a similar level as last year, profitability in the flexible printed circuit board (FPCB) segment is expected to strengthen thanks to increased sales of ultra-thin PI film, which has high profit margins. As a result, the company’s overall profitability should come in near existing expectations."

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