Domestic small business companies will announce their first quarter 2020 results later this month. (Photo by Pixar Bay)
The domestic material, parts and equipment industry is expected to have mixed first quarter results due to supply chain issues due to the spread of new coronavirus infections.
Among the camera modules and printed circuit boards industry, companies that have acquired Apple as a major trading line are expected to be ahead of the smartphone market amid a downturn. In the semiconductor, display equipment, and materials industry, companies supplying NAND FLASH and organic light emitting diode equipment and materials are expected to perform well.
According to the Financial Supervisory Service’s electronic disclosure system on 16 July, korean small and representative companies such as Samsung Electric and LG Innotek, Innox Advanced Materials, SK Materials, Parton, BIEI, AP Systems, and WONIK IPS will announce their first quarter results.
Securities analysts expect earnings to be mixed in with the effect of ordering major trading orders in the first quarter, even as the company’s demand for forward industry stagnates in the aftermath of the Corona 19 spread.
An official in the electronics industry said, “Q1 performance is expected to be performed by small companies based on strategic trading lines,” and that “despite the overall market downturn caused by Corona 19, some companies have seen results in increased investment and new product launches on major trading lines.”
■ Camera module industry, ‘Galaxy S20 launch effect’ is less than expected due to slump in demand
The first quarter results of the camera module industry are expected to be based on the consensus (market average) of securities information company F&Guide, samsung electric, sales of KRW 2.261 billion, operating profit of KRW 153.7 billion, Parton, sales of KRW 251.2 billion, operating profit of KRW 14.2 billion, LG Innotek, sales of KRW 1.732 billion and operating profit of KRW 68.9 billion.
This is a decrease in both sales and operating profit by Samsung Electric and Parton compared to the previous year, while LG Innotek saw an increase in both sales and operating profit.
Samsung Electric and Parton’s first-quarter earnings sluggishness is interpreted as the impact of corona 19 on the global smartphone market’s slowdown in demand. Samsung Electronics supplied high-end multi-camera modules (galaxy S20 series) to expand sales, but since March, the company’s production of camera modules has decreased due to a slowdown in demand.
Samsung Electric’s first quarter 2020 earnings forecast. (Data = Securities)
LG Innotek, on the other hand, is expected to deliver first-quarter results due to the camera module supply effect as Apple enters the launch of a new mid-range product (iPhone SE) with discounted sales of the existing iPhone series (iPhone 11, etc.).
The same is true for b.i.e., a printed circuit board company. BhI’s first quarter results are expected to increase both sales and operating profit compared to last year with sales of KRW 127.1 billion and operating profit of KRW 7.3 billion based on F&Guide consensus, and both sales and operating profit are expected to increase due to the iPhone SE launch effect (supply of contestable printed circuit boards).
Park Kang-ho, a securities researcher, said, “(LG Innotek’s) first quarter optical solutions (camera module) profitability was touted as expected, but production was due to delay in the launch of the new model (iPhone SE) by corona 19, but production was in March, and the average exchange rate of KRW 1,194.5 was 1,194.5 won in the first quarter of 2019, up from 19 won in the fourth quarter of 2019 and 45 won in March.
■ In the semiconductor, display equipment, materials, oled and nandflash sectors
First quarter results in the semiconductor, display equipment and materials industry are expected to be based on f&guide consensus : AP system, sales of KRW 119.4 billion, operating profit of KRW 7.5 billion, won ips, sales 157.5 billion won, operating profit of 9.2 billion won , Innox advanced materials, sales 71.5 billion won, operating profit 6.3 billion won , SK Materials, sales 193.1 billion won and operating profit 48.1 billion won.
This is a year-over-year increase in both sales and operating profit for AP Systems and Won-Profit IPS, while Innox Advanced Materials has seen a decrease in both sales and operating profit. For SK Materials, sales increased during the same period, but operating profit decreased.
AP System’s first-quarter earnings are believed to have benefited from the impact of equipment orders, especially in Corona 19, as Chinese display companies continue to invest in organic light emitting diode (OLED) production lines. In January and February of this year alone, the BOE and CSOT have a 6th generation flexible organic light emitting diode (OLED) of KRW 234 billion for ELA (laser heat treatment · Excimer Laser Annealing) has achieved the ability to supply equipment.
AP System 2020 First Quarter Earnings Forecast. (Data =IBK Investment Securities)
However, the first quarter results of wonik IPS were the semiconductor equipment supply effect, but it is expected to slow compared to the consensus of F&Guide. Due to the increased demand in the server market, including data centers, Samsung Electronics supplied nandflash equipment (molding) according to NAND Flash investment (Cyan), but the equipment (plasma chemical vapor deposition equipment) received by Chinese display companies was not reflected in the performance due to logistics delays.
“Although the supply of semiconductor equipment to Samsung Electronics was supplied smoothly in the first quarter, the supply of equipment directed to Chinese display companies was not reflected in the second quarter due to delays in the first quarter,” said Baek Gil-hyun, a researcher at Yuanta Securities.
The slowdown in Innox Advanced Materials’ first-quarter earnings is attributed to samsung electronics’ sluggish sales of the Galaxy S20 and the delay in lg Display’s oled plant in Guangzhou, China. Corona 19 suffered a performance blow as Samsung Display’s factory utilization rate dropped. Innox Advanced Materials supplies samsung display and LG Display with the main material of OLED: bag materials, light-sensitive polyimide, backplate film, etc.
On the other hand, SK Materials’ first quarter results are analyzed as driving the performance of samsung display’s liquid crystal display (LCD) business due to the reduction in sales, as well as the expansion of special gas supply for OLED and special gas supply for semiconductors (sales expansion).
“(SK Materials) (Sk Materials) is expected to achieve solid performance due to increased semiconductor sales due to the reduction in sales due to the withdrawal of LCD panels from domestic display companies in q1,” said Lee Su-bin, a securities researcher. In addition, as the utilization rate of semiconductor customers increases, it is expected that shipments (special gases for semiconductors) are stronger than expected. Although sales of each material supplied for semiconductors are small, the number of products has increased, and shipments have increased, and it appears to be an active defense of performance.”
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