SK Securities on the 17th assessed HAESUNG DS as a company expected to benefit simultaneously from the memory market boom and the electric vehicle market recovery that will begin next year. It initiated coverage with a Buy and a target price of 72,000 won. HAESUNG DS closed at 49,050 won the previous day.
HAESUNG DS's main business is manufacturing semiconductor substrates, and it primarily supplies packaging substrates for general-purpose memory and lead frames for IT and automotive uses. As of the cumulative third quarter of this year, the revenue mix was 77% lead frames and 23% packaging substrates.
Kwon Min-gyu of SK Securities said, "We expect concurrent benefits from the current memory market boom and the recovery of the electric vehicle market and unit price increases starting next year, which will drive a rebound in lead frame earnings."
It was expected that fourth-quarter results this year will beat consensus (the market's average forecast). SK Securities estimated HAESUNG DS's fourth-quarter operating profit at 25 billion won. Consensus is 18.5 billion won.
Kwon said, "Given the high exchange rate effect and the nature of the substrate business with high operating leverage, the profit increase from higher utilization is likely to be larger than expected."
Structural growth is expected to continue next year as well. Kwon said, "As existing competitors begin to focus on supplying high-end packaging substrates, benefits are expected to concentrate on HAESUNG DS, which has relatively ample medium- to low-value substrate capa (production capacity)."