[Click e-Stock] "Haesung DS, Vehicle Lead Frame Sales Expected to Peak... Target Price Up 16%"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on Haesung DS on the 19th, reflecting the strong performance in the automotive lead frame sector, and set the target price at 35,000 KRW, a 16% increase from the previous target.

Haesung DS's sales in the fourth quarter of last year are expected to reach 113.5 billion KRW, a 7% increase compared to the same period last year. Operating profit is estimated to have decreased by 48% year-on-year to 6.1 billion KRW. The operating profit is expected to show weak profitability due to increased raw material costs caused by the decline in exchange rates and the sharp rise in copper prices. Additionally, one-time expenses such as provisions related to performance bonuses, amounting to around 1 billion KRW, were reflected, resulting in a figure approximately 30% below market expectations.

Haesung DS's sales for this year are projected to increase by 9% year-on-year to 501.6 billion KRW, with operating profit rising 15% to 50.3 billion KRW. Sales of the main product, automotive lead frames, are expected to slightly exceed previous forecasts, increasing by 17% from last year to 181.1 billion KRW.

Hana Financial Investment highlighted the likelihood that customers will seek stable procurement of lead frames due to the shortage of automotive semiconductors. Kim Rok-ho, a researcher at Hana Financial Investment, stated, "It is understood that the company is considering facility expansion to respond to the increasing demand for automotive lead frames. The company recorded an annual growth rate of around 15% even during the sales decline period of its customers from 2018 to 2020, so there is a strong possibility that it will exceed the existing growth rate during this year’s sales growth period for its customers."

The proportion of automotive lead frames in Haesung DS's total sales has expanded from 31% in 2016 to 36% this year, increasing not only the scale but also the profit contribution. Recently, interest has surged in companies that have secured front-end industries for automotive electronics within the IT sector, leading to a significant rise in the stock price.

Researcher Kim Rok-ho explained, "It is reasonable to apply the highest historical multiple, a PER (price-to-earnings ratio) of 17 times, during the period when Haesung DS's competitiveness in automotive lead frames is being recognized. Since automotive sales are renewing record highs every year, it is worth expecting the best performance this year as well."

This content was produced with the assistance of AI translation services.