MERITZ Securities analyzed on the 15th that LEENO Industrial is expected to report strong earnings this year in the second quarter as shipments of high-value research and development (R&D) sockets surge. The firm raised its target price from 49,000 won to 61,000 won while maintaining its investment opinion of 'buy.' The closing price of LEENO Industrial on the previous trading day was 51,200 won.
MERITZ Securities expects LEENO Industrial's revenue and operating profit in the second quarter to reach 104.1 billion won and 50.4 billion won, respectively, representing increases of 47% and 52% compared to the same period last year. The operating profit exceeds the market forecast in the securities industry (an 18% increase).
The performance growth is largely due to the expansion of shipments of production sockets for mid-range smartphones and the surge in shipments of high-value new application R&D sockets. Researcher Kim Dong-kwan of MERITZ Securities noted that 'mobile sockets for North American set makers typically peak in the second quarter' and specifically mentioned that shipments of sockets for new applications such as graphics processing units (GPUs) and large semiconductors for data centers have surged since May. Thanks to the expansion of high-value R&D socket shipments, the quarterly operating profit margin is expected to improve by 3.9 percentage points compared to the previous quarter.
In annual terms, LEENO Industrial's revenue for this year is estimated to increase by 25% to 347.9 billion won, while its operating profit is expected to rise by 30% to 161.9 billion won. Shipments of high-value sockets for new applications such as artificial intelligence (AI) are expected to continue to increase in the third quarter.
Researcher Kim stated, 'The strong performance in the second quarter will provide an opportunity to confirm that the expansion of research and development for new large device chips translates into benefits for the company.'
He added, 'In the mobile institutional sector, transactions with new customers from the Greater China region's fabless semiconductor design companies are set to begin in the third quarter of this year, and supply is expected to start primarily for mass production sockets focused on high-end products.'