Kyobo Securities said on the 14th that while TLB, a printed circuit board (PCB) maker, faces short-term supply-demand pressure after announcing both paid-in and bonus share issues recently, the stock is attractive when considering the medium- to long-term trajectory.
It kept its investment rating at "Buy" and raised the target price to 95,000 won from 82,000 won. TLB's closing price in the previous session was 74,500 won.
On the 10th, TLB disclosed that it would conduct a paid-in capital increase worth 120 billion won and a 1-to-1 bonus issue at the same time. The paid-in issuance is to raise funds for additional expansion of its Vietnam plant. Through an investment of about 120 billion won, the company aims to secure manufacturing facilities at the Vietnam site on par with its headquarters plant and double production capacity (CAPA) from last year.
Park Hee-cheol, an analyst at Kyobo Securities, said, "Since the second half of last year, TLB has faced demand at a full-capacity level, so the need for expansion has been consistently raised," adding, "Looking at similar cases, paid-in capital increases for large-scale facility investments have been factors that substantiated a strong industry cycle."
In particular, given recent price hikes on substrates supplied starting with domestic memory makers, the analyst assessed that the AI-driven substrate boom remains underway.
The analyst added that while there may be short-term deterioration in investor sentiment due to this issuance, it is a positive factor in the medium to long term. The capacity additions from this investment are expected to be recognized as revenue starting in 2028.
For the first quarter this year, TLB's consolidation-basis revenue is projected at 74.7 billion won and operating profit at 9.5 billion won. Revenue rose 41% from a year earlier, and operating profit jumped 407.8% year over year.
Park said, "Despite the continued trend of rising manufacturing costs, solid margin levels are being maintained," adding, "Sustained demand for high value-added BVH substrates is the key factor, and additionally, mass-production revenue from SOCAMM began to be reflected from the first quarter."
For this year, results are forecast at 346.4 billion won in revenue and 48.3 billion won in operating profit. Those figures are up 34% and 85.9%, respectively, from a year earlier.
Park added, "Competitors are maintaining high valuations along with the substrate supercycle," noting, "TLB has also dispelled the possibility of medium- to long-term growth stagnation and removed the factors for derating."