[Click eStock] "Tes, Operating Profit Expected to Increase by 35% This Year"

DS Investment & Securities forecasted on the 31st that Tes's operating profit will increase by 35% compared to the previous year. Accordingly, they issued a 'Buy' investment rating with a target price of 28,000 KRW.

Researchers Su-rim Lee and Jin-hyung Kim of DS Investment & Securities evaluated, "Among front-end equipment companies, Tes has exposure to leading DRAM, benefits from NAND transition, and possesses all the momentum for earnings growth." The target price is 29% higher than the closing price on the 28th (21,700 KRW).

Tes has been supplying PECVD (Plasma Enhanced Chemical Vapor Deposition) equipment mainly for NAND, but since last year, it has rapidly expanded its sales proportion toward DRAM. The DRAM sales ratio reached 77% of total sales last year and is expected to maintain around 60% this year. DS Investment & Securities explained, "With the spread of HBM (High Bandwidth Memory), DRAM expansion and process transition are accelerating. In the first half of the year, domestic memory companies are expected to invest in DRAM 1b process transition and NAND 300-layer transition, and in the second half, 1c process transition and new investments are anticipated."

Customer diversification was also positively evaluated. Until 2021, the largest customer's sales ratio was as high as 75%, but it dropped to 39% last year. Meanwhile, sales to new overseas customers increased to 14%. DS Investment & Securities stated, "Overseas customers have higher unit prices compared to domestic customers, so sales growth leads to margin improvement," and forecasted, "The sales ratio to overseas customers will reach around 15% this year."

Tes's expected operating profit for this year is estimated at 52 billion KRW, a 35% increase from 38.5 billion KRW last year. DS Investment & Securities analyzed, "Tes's price-to-earnings ratio (P/E) for 2025 is 8.4 times, which is still undervalued compared to the recent 5-year average 12-month forward P/E of 10.8 times," adding, "Considering the earnings growth momentum, there is a high possibility of stock price increase."

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