Eugene Investment & Securities on the 30th raised its operating profit estimates for Daeduck Electronics for this year and next by 25% and 30%, respectively, expecting increased substrate sales for controllers and rising aerospace demand. It also lifted its target price to 190,000 won from 120,000 won and maintained a "strong buy" investment opinion. The previous day's closing price was 115,400 won.
In the first quarter of this year, Daeduck Electronics posted revenue of 346.4 billion won and operating profit of 51.3 billion won. Compared with a year earlier, revenue rose 61% and operating profit increased 77%.
Lee Ju-hyung, an analyst at Eugene Investment & Securities, said the strong first-quarter results were driven largely by a rapid profitability improvement in flip chip ball grid array (FC-BGA) and higher aerospace demand that boosted revenue and profitability in the MLB business.
Memory PKG revenue was 152.8 billion won, slightly below estimates, but was encouraging considering it was the off-season. The analyst projected that once line reallocation and efficiency measures are completed in the second quarter of this year, the company will finish expanding production capacity by about 50 billion won per year.
FC-BGA revenue was 79.4 billion won, slightly above the initial estimate of 75.4 billion won.
The analyst said, "The share of controller-related sales in FC-BGA revenue increased by 10 percentage points from the previous quarter," and noted, "Domestic IDM companies, customers for controller products, are allocating capacity mainly to eSSD from single SSDs, and the rise in sales of controller product lines through the second half of this year is highly likely to contribute significantly to improving utilization at the company's FC-BGA lines."
First-quarter revenue from multilayer printed circuit boards (MLB) was 55.5 billion won, exceeding the initial estimate of 49.4 billion won. The analyst said that as supply of MLB substrates to a global top-tier satellite operator expanded sharply, first-quarter aerospace-related MLB revenue came to 18.3 billion won, up 118% from the previous quarter.
The analyst said, "MLB products for key customers are estimated to far exceed companywide profitability," adding, "Substrate sales to a North American semiconductor customer are expected to expand sharply into triple digits starting in the second half of this year."