Meritz Securities on the 16th said earnings growth at Daeduck Electronics is expected to continue as the average selling price (ASP) increases across all product lines begin in earnest. It maintained its Buy rating and raised its target price to 200,000 won from 190,000 won. The previous trading day's closing price was 167,700 won.
Yang Seung-su, an analyst at Meritz Securities, said, "In product lines including memory package substrates, FC-BGA, FC-CSP and MLB, the ASP increase reflecting higher materials and supplies costs will be fully reflected," adding, "In particular, not only for new products but also for existing products, price pass-through is gaining momentum, making the broad-based ASP increase visible."
Meritz Securities projected Daeduck Electronics' second-quarter revenue and operating profit at 381.8 billion won and 62.0 billion won, respectively. That would be up 55.1% and 3,224.6% from a year earlier, beating market consensus by 3.2% and 5.7%, respectively.
By business unit, expansion of capacity in memory package substrates and FC-CSP is expected to begin in earnest. Daeduck Electronics announced an investment plan worth 213.0 billion won in May and will start building new production facilities. Yang said, "If all equipment is installed, capacity could expand by about 80% compared with the existing plant," adding, "The new facility is expected to come on line from the third quarter of 2027."
In the FC-BGA unit, a previously postponed investment of 90.0 billion won has resumed. Preorders for key production equipment are underway, and additional capacity expansion is reportedly under review. The company currently has four FC-BGA plants, and one of them is using only a single floor. Yang said, "In addition to the 90.0 billion won investment, additional investment to fill the remaining floors and discussions related to customer advance payments are underway."
In particular, Daeduck Electronics began mass production of large-area FC-BGA in June. In the second half, mass production of large-area, high-layer FC-BGA for AI networks is also expected to begin in earnest. Yang said, "The lack of large-area FC-BGA mass production references has acted as a valuation discount," adding, "With this start of mass production, that discount factor will gradually ease."
The MLB unit is also expected to continue growing. Yang said, "While aerospace-related sales are steadily increasing, sales to a new aerospace customer will be added from the fourth quarter," adding, "Also, starting in the second half, supplies of compute boards for major AI customers will begin, leading to ASP increases from a better product mix and improved profitability."