[Click eStock] "DB HiTek, Stock Price Still Undervalued"

[Asia Economy Reporter Park Ji-hwan] Shinhan Financial Investment maintained a 'Buy' rating and a target price of 74,000 KRW for DB HiTek on the 15th, stating that the stock price is still undervalued.

Choi Do-yeon, a researcher at Shinhan Financial Investment, stated, "DB HiTek's operating profit for the fourth quarter of last year was 30.4 billion KRW, a 36.5% decrease compared to the previous year, but sales increased by 7.4% to 227.8 billion KRW.

Although the operating profit fell significantly short of our estimate of 54.3 billion KRW, considering the increase in depreciation expenses of 22.7 billion KRW due to the change in the useful life of machinery and equipment from 11 years to 6 years, it is evaluated to be in line with expectations.

In particular, the decline in performance is attributed to accounting changes rather than fundamental changes, and if physical expansion proceeds after accelerated depreciation, the cost burden could be alleviated.

The timing when price increases are possible is also positive news. Researcher Choi explained, "From the end of the first quarter of this year, when new IT set products are fully launched, price increases are expected to be in full swing, and the shortage of 8-inch foundry supply is likely to continue for the time being."

DB HiTek's sales this year are expected to increase by 9.6% to 1.0259 trillion KRW compared to last year. Operating profit is expected to decrease by 0.9% to 237.3 billion KRW. Even considering the annual increase in depreciation expenses of 72.3 billion KRW, record-high performance is anticipated.

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