[Edaily Reporter Kwon Oh Seok ] IBK Investment & Securities announced on the 4th that it is maintaining its “Buy” rating on CMTX Co.,Ltd. but lowering its target price from 115,000 won to 80,000 won.

Lee Geon-jae, Head of the KOSDAQ Research Center at IBK Investment & Securities, stated, “When we initiated coverage last September, we anticipated that the third-quarter earnings would serve as a crucial indicator of whether revenue growth and high profitability would continue. However, despite an increase in revenue, profitability declined, failing to meet expectations.” He added, “The key to a future stock price revaluation lies in whether the company can resolve supply disruptions caused by changes in client specifications and restore its operating profit margin.”
Preliminary third-quarter results showed revenue of 48.4 billion won (up 18.1% year-over-year) and operating profit of 10.5 billion won (down 32.2%). Despite the revenue increase, operating profit declined, resulting in an operating profit margin of just 21.6%.
He noted, “While revenue growth and maintaining profitability above 30% were the core factors in previous investment decisions, the company failed to meet expectations regarding profitability,” and added, “These results will serve as an opportunity to reassess the enterprise value premium that was established based on TSMC’s supply track record and high profit margins.”
Center Director Lee noted, “We estimate that the main reasons for the poor performance are production line transitions at major domestic clients and specification changes for some products. It also appears that product specification changes at Taiwanese clients have impacted supply.” He pointed out, “Consequently, as revenue fell short of initial expectations, the burden of fixed costs likely increased, leading to a decline in profitability.”
He added, “Changes in revenue by client and detailed cost breakdowns require further verification, and it remains to be seen whether this slump stems from a temporary supply disruption or a shift in the profit structure.”