[Click e-Stock] "Haesung DS to See Over 100% Growth in Operating Profit Next Year... Target Price Raised"

On December 2, Meritz Securities maintained its "Buy" investment rating on Haesung DS, citing continued improvement in performance, and raised its target price from 65,000 won to 69,000 won.

Meritz Securities expects Haesung DS to post consolidated sales of 185.5 billion won and operating profit of 18.9 billion won for the fourth quarter of this year, up 27.8% and 201.7%, respectively, compared to the same period last year. The operating profit is expected to exceed the market consensus by 3.4%.

Yang Seungsoo, a researcher at Meritz Securities, said, "Demand for package substrates remains stronger than expected due to increased market share among DDR5 clients and expanded volumes for DDR4 OSAT. In addition, favorable foreign exchange effects are contributing, so further growth is expected compared to the third quarter, contrary to the usual perception of a low season."

Next year's estimated sales and operating profit are projected to reach 798.3 billion won and 90.6 billion won, representing year-on-year growth of 21.1% and 107.8%, respectively. He explained, "Qualification testing for package substrates destined for domestic clients is expected to be completed within this year. If passed, additional supply is expected to begin at the domestic plant in the first quarter of next year and at the China plant in the second quarter."

He also emphasized, "For lead frames, since prices are linked to LME prices, stable profitability is expected to be maintained even if raw material prices rise. We are currently conducting sample tests for new copper-clip products for AI servers, and if approved, we anticipate significant benefits related to the adoption of new 800V server racks by North American GPU clients."

The stock's valuation appeal is also coming into focus. Haesung DS's expected price-to-earnings ratio (PER) for 2026 is 11.9 times, which remains at a discount compared to domestic memory substrate and global lead frame competitors. He assessed, "With profit growth of over 100% expected next year, the current share price is clearly undervalued, making it highly attractive for investment."

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