LS SECURITIES projected on the 26th that, due to continued natural reduction by Samsung Electronics, it would be difficult for Soulbrain to recover the wafer input amount for its NAND business. It adjusted the target price down by 25% from the previous 320,000 won to 240,000 won, while maintaining the investment opinion of 'buy.' The closing price of Soulbrain on the previous trading day was 159,300 won.
In the first quarter of this year, the consolidated sales and operating profit of Soulbrain recorded 209.5 billion won and 36 billion won, respectively, down 1% and 22% compared to the previous year.
Researcher Cha of LS SECURITIES explained, 'The reason why the performance fell short of our estimates (sales of 222.2 billion won, operating profit of 47.5 billion won) is because the investment in NAND conversion at Samsung Electronics' Xi'an Plant 1 is ongoing, reducing wafer input due to natural reduction.' He also noted that Samsung Electronics' production of high-bandwidth memory (HBM) sharply decreased in the first quarter, causing sales of chemical mechanical polishing (CMP) slurry to plummet by 19% from 17.2 billion won in the previous quarter to 13.9 billion won.
LS SECURITIES projected that due to the ongoing natural reduction by Samsung Electronics, Soulbrain's consolidated sales would decrease by 1% year-on-year to 856.5 billion won, and operating profit would decline by 8% during the same period to 153.7 billion won.
Researcher Cha stated, 'After the conversion of Samsung Electronics' Xi'an Plant 1, it plans to proceed with the investment to convert Xi'an Plant 2,' and added, 'Soulbrain's semiconductor material utilization rate will find it hard to record a steep rise due to the difficulty of recovering wafer input amounts in the NAND industry because of Samsung Electronics' ongoing natural reduction.'
The performance of the secondary battery division is also expected to decline by about 26%, with sales dropping from 88 billion won last year to 64.8 billion won this year due to weak demand in the market.
Researcher Cha noted, 'If the actual demand in the NAND industry does not recover, it will be difficult for the key factors determining Soulbrain's performance, wafer input amounts, and the valuation (corporate value) determined by NAND prices to rise simultaneously.'