[Click eStock] "Daeduck Electronics, Moderate Earnings Improvement in Second Half... Buying Opportunity at Low Prices"

On the 20th, BNK Investment & Securities stated that considering the future growth potential of Daeduck Electronics, further declines are limited, and from a long-term perspective, it is seen as a buying opportunity at a low price. They issued a buy rating with a target price of 37,000 KRW.

Since transitioning to a holding company, Daeduck Electronics has restructured its business by divesting low-profit operations and focusing on a semiconductor printed circuit board (PCB)-centered business model. In particular, it has heavily invested in the FC-BGA business and currently possesses an annual production capacity of 450 billion KRW, with plans to expand to an annual capacity of 750 billion KRW by 2025 regardless of short-term market conditions.

FC-BGA requires advanced technology such as fine circuit implementation and large-area scaling, resulting in high entry barriers, and only a few companies worldwide operate in this business. Daeduck Electronics is evaluated to be entering the server memory controller market from the third quarter of this year and the high-end HPC market early next year.

Daeduck Electronics’ third-quarter sales are expected to decline 34% year-on-year to 244.6 billion KRW, and operating profit is forecasted to drop 85% to 11.7 billion KRW, both falling short of market consensus estimates of 252.4 billion KRW and 21.9 billion KRW, respectively.

Minhee Lee, a researcher at BNK Investment & Securities, explained, "Due to continued sluggish demand in automotive and industrial sectors, FC-BGA sales, which previously had the highest profitability, sharply declined in the first half and have shown only minimal recovery. Meanwhile, relatively less profitable memory sales have steadily increased thanks to rising DDR5 demand, worsening the product mix. However, long-term expectations for high growth in automotive and artificial intelligence (AI) demand remain valid, and with expanded production scale and technological advancements, the company is expected to return to a growth trajectory next year."

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