[Click eStock] "DB HiTek, Another Performance Level-Up Expected This Year"…Target Price Up

[Asia Economy Reporter Song Hwajeong] Yuanta Securities raised the target price for DB HiTek from 92,000 KRW to 106,000 KRW on the 3rd, expecting the company’s performance to level up this year. The investment opinion of 'Buy' and the status as the top preferred small- and mid-cap semiconductor stock were maintained.

Researcher Lee Jaeyoon of Yuanta Securities said, "At the beginning of last year, the annual operating profit consensus for DB HiTek was 250 billion KRW, which has now been revised upward to 360 billion KRW, an increase of about 44%, leading to a 40% rise in the stock price. We believe there is still room for upward revision of last year’s performance consensus, and the annual operating profit consensus for this year is expected to increase by more than 30% to around 457.4 billion KRW," he said.

DB HiTek’s fourth-quarter results for last year are expected to significantly exceed consensus estimates. Yuanta Securities estimated DB HiTek’s Q4 sales and operating profit at 359.1 billion KRW and 136.6 billion KRW, respectively, representing increases of 58% and 349% compared to the same period last year. The average consensus for Q4 sales and operating profit are 333 billion KRW and 103.6 billion KRW, respectively. The researcher analyzed, "The price increase of 8-inch foundry wafers and favorable KRW-USD exchange rate conditions will positively impact performance. Q4 wafer shipments are expected to increase by 2% quarter-on-quarter, and the average price is expected to rise by 4%."

Yuanta Securities forecasts DB HiTek’s annual sales this year to increase by 26% year-on-year to 1.5 trillion KRW, and operating profit to grow by 54% to 601.4 billion KRW. The researcher explained, "We raised the annual average price increase assumption for 8-inch wafers from 4% to 8%, increasing the previous operating profit estimate of 515.6 billion KRW by 16%."

Considering the contract trends for 8-inch foundry wafer prices among leading Taiwanese companies this year, DB HiTek’s wafer prices next year are expected to rise by at least 10% and up to 30%. However, the price for DDI, which accounts for 15-20% of DB HiTek’s sales, is expected to decline slightly. The researcher added, "Production capacity, which began to increase quarterly from Q2 this year, is expected to be reflected in annual performance next year. DB HiTek’s monthly production capacity increased from 129K at the beginning of the year to 138K by the end of Q3, and is expected to expand to 150K by Q3 next year." He continued, "The recent trend of increasing production capacity at DB HiTek is unusually large in scale, which could be an event that alleviates concerns about limited sales growth, which has been DB HiTek’s Achilles’ heel."

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