LS Securities said on the 25th that Soulbrain(357780) is expected to see growth in its core business on increased wafer starts (WSPM) and higher utilization at Chonbang customers. It set a "Buy" rating and a target price of 500,000 won. The previous session's closing price was 330,000 won.
Jung Woo-sung, an LS Securities researcher, said, "With Chonbang customers' WSPM increasing and utilization rising, full-fledged earnings improvement will appear this year," and noted, "As the ramp-up effect of new capacity (CAPA) is fully reflected next year, increased material usage from higher memory output and process advancement is expected to drive earnings growth."
Jung expected the sustainability of earnings growth to be strong. Because for material suppliers, revenue is linked to actual wafer input and utilization after equipment is brought in, expansion of customer CAPA translates into long-term recurring revenue.
After 2028, contributions from new businesses such as acetic acid-based etchants for leading-edge foundry processes, glass substrates, and high-k are expected to add to growth in existing memory materials.
Jung said, "Earnings per share (EPS) will grow 110.5% this year, 32.8% in 2027, and 28.0% in 2028," adding, "Even after a strong base recovery this year, it is worth noting that earnings growth of around 30% is set to continue next year and the year after."
Soulbrain's sales this year are projected at 1.1956 trillion won, up 29.5% from a year earlier, with operating profit rising 59.8% to 213.5 billion won.
Jung said, "Given medium-term earnings growth, the current 12-month forward (12MF) price-earnings ratio (PER) of 12.4 times is not burdensome and is undervalued relative to its growth rate," adding, "Rather than reflecting only a short-term earnings rebound, considering the increase in Chonbang WSPM continuing into next year and beyond and the expansion of new material sales, there is ample room for valuation re-rating."