[Click eStock] "Simtek, No Impact from Smartphone Slump"... Target Price Up

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 15th that although the smartphone market is expected to stagnate due to inflation, Simtek's lower mobile proportion compared to competitors will likely result in better-than-expected earnings for the second quarter, raising the target stock price to 50,000 KRW.

Kim Ji-san, a researcher at Kiwoom Securities, stated, "Concerns about demand slowdown for mobile package substrates such as FC-CSP, MCP, and SiP cannot be ruled out amid the smartphone market slump," but added, "In Simtek's case, FC-CSP's mobile AP (smartphone core semiconductor chip) proportion is about 20%, mainly growing through SSD (Solid State Drive) controllers and server buffer ICs. MCP has a significantly higher NAND proportion than mobile DRAM, and SiP is supplied for wearable devices, which should help mitigate the impact of the smartphone downturn."

Simtek is achieving quality improvements along with an increase in the blended average selling price (Blended ASP) of high value-added FC-CSP, SiP, and DDR5 module PCBs.

In the downstream sectors, benefits are expected from the growth of SSDs and wearable devices. Favorable exchange rate conditions and product improvements are anticipated to lead to earnings surpassing market expectations.

The company’s operating profit for the second quarter is projected to reach 97.1 billion KRW, a 211% increase compared to the same period last year, exceeding the market consensus of 88.1 billion KRW. Annual sales are forecasted to increase by 29% to 1.7577 trillion KRW, with operating profit rising 112% to 369.4 billion KRW.

Researcher Kim said, "Even assuming profit stagnation in the second half, a price-to-earnings ratio (PER) of 5.2 times is attractive," and added, "DDR5 penetration is expected to reach 4% this year, expanding sales of server and PC module PCBs to 50 billion KRW, with the usual significant ASP premium during the early transition phase."

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