NH Investment & Securities said on the 19th that Soulbrain has strong mid- to long-term growth potential considering the expansion of acetic-acid-based etching solutions, a U.S. entry, and new products. It raised its target price to 480,000 won from 385,000 won and maintained a "buy" rating. Soulbrain's closing price in the previous session was 398,000 won.
In the fourth quarter last year, Soulbrain posted revenue of 244 billion won, up 12.7% from a year earlier, and operating profit of 42.9 billion won, up 17.9%. Expenses related to Sun Fluoro System and costs from exiting the TG business were reflected as non-operating losses, pushing net profit well below market expectations.
Joo Min-woo, an analyst at NH Investment & Securities, said, "This year, supplies of materials for new DRAM fabs and expanded deliveries of phosphoric-acid-based etching solutions tied to the NAND transition will gradually take place, and as the business environment at Sun Fluoro System normalizes, full-fledged contribution to earnings will be possible." The analyst expected stepwise quarterly earnings growth.
NH Investment & Securities noted that share-price volatility is high on expectations for the government's KOSDAQ support policies. It said there is a need to focus on Soulbrain's mid- to long-term growth rather than short-term volatility.
Joo said, "NAND's mid- to long-term growth potential is increasing," adding, "Thanks to the recent surge in NAND prices, manufacturers' profitability is also improving significantly, so from the second quarter this year they will enjoy the transition effect, and meaningful earnings recovery is expected next year."
Joo added, "Acetic-acid-based etching solutions are also expected to benefit from the restoration of competitiveness at foundry customers, while the U.S. entry that will begin in earnest next year, glass substrates, and black PDL are also positive factors."