[Click eStock] "DB HiTek, Concerns Already Priced In... Undervalued Zone"

[Asia Economy Reporter Kwon Jaehee] Shinhan Financial Investment maintained its 'Buy' rating and target price of 74,000 KRW for DB HiTek on the 26th.

DB HiTek is expected to record its highest-ever performance again in the third quarter of this year. Third-quarter sales are projected at 464.5 billion KRW, and operating profit at 226.8 billion KRW, representing increases of 6.6% and 6.4% respectively compared to the previous quarter, setting a new record high. Although cost increases are anticipated due to rising raw material prices and labor costs, a 100% utilization rate is being maintained, and the exchange rate has risen compared to the previous quarter, which is expected to improve performance.

In the fourth quarter, performance is expected to decline slightly compared to the previous quarter due to anticipated one-time expenses such as incentives.

This year, sales are forecasted to reach 1.7371 trillion KRW, and operating profit 809 billion KRW, representing increases of 43% and 102.7% respectively compared to the previous year.

Overall semiconductor demand is weak, but DB HiTek's utilization rate is still understood to be 100%. However, further price increases seem difficult. This is the reason for the recent sluggish stock price. Nevertheless, the 8-inch foundry supply contract is expected to continue long-term. The Chip4 alliance is expected to limit the increase in semiconductor supply from China, and considering the increased lead time for semiconductor equipment and the fact that equipment manufacturers have no spare 8-inch equipment, the operating profit margin (OPM) is expected to be maintained above 30% in the mid to long term.

Choi Doyeon, a researcher at Shinhan Financial Investment, analyzed, "Although performance in 2023 is expected to decline somewhat due to macroeconomic uncertainties such as decreased semiconductor demand, the 8-inch foundry boom will re-enter an upward cycle in the second quarter of next year," adding, "The recent stock price has already reflected negative concerns, and the current stock price is undervalued."

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