Hana Securities said on the 26th that OE Solutions is expected to swing to a profit on the back of a frequency auction and in-house production of laser diode (LD) chips. It kept its Buy rating and raised its target price to 60,000 won from 30,000 won. The previous trading day's closing price of OE Solutions was 41,600 won.
Kim Hong-sik, an analyst at Hana Securities, said, "Investment road maps for telecom equipment have been fleshed out, including a U.S. frequency auction and AT&T's $250 billion capital expenditure (CAPEX) plan, and demand is expected for large volumes of transceivers for fronthaul," adding, "With LD chip in-house production, operating profit could reach an all-time high."
OE Solutions' revenue last year plunged to one-fifth of its 2019 level, when the auction for fifth-generation (5G) wireless service was underway.
Hana Securities estimated that currently installed 5G-dedicated base stations amount to 10%–30% of those for fourth-generation (LTE). Given that sixth-generation (6G) frequencies have narrower coverage than 5G and that ultralow latency is required for physical AI, new 5G-SA/6G-dedicated base stations must be built. That implies additional base-station construction will increase demand for transceivers.
It also viewed as a positive that while LD chips were purchased externally in 2019, the company has now succeeded in bringing production in-house.
Kim said, "Because LD chips account for a high share of cost, margins will improve dramatically when using in-house LD chips," adding, "With that in mind, starting in the second half of 2026, it would not be difficult to set a new all-time high for operating profit."
Meanwhile, OE Solutions recently succeeded in developing a 1.6T transceiver for servers and has been actively moving to address AI–optical supply and demand, sending its share price sharply higher.
Kim said, "Some investors may feel burdened by the steep share-price rise," but added, "Considering the typical share-price pattern of telecom equipment makers and OE Solutions' earnings outlook, there is still ample room for further gains."