[Click e-Stock] "Doosan Tesna Expected to See 158% Operating Profit Growth Next Year... Target Price Raised"

Target Price Raised by 21.3% Compared to Previous Estimate

Korea Investment & Securities announced on May 19 that it has raised its target price for Doosan Tesna from 174,000 won to 211,000 won, anticipating significant growth in the company's performance next year. The investment opinion remains 'Buy'.

Nam Chaemin, analyst at Korea Investment & Securities, stated, "We are raising Doosan Tesna's target price by 21.3% compared to the previous forecast. This is due to revisions in our 2027 earnings estimates." He added, "Next year's operating profit is expected to grow by 158% year-on-year. Such a growth rate is remarkable even when compared to global OAST (Outsourced Assembly and Semiconductor Test) companies, and considering the foundry mass production volume projected for 2027 and 2028, there remains further earnings upside potential."

Korea Investment & Securities also raised the sales conversion ratio for Doosan Tesna's image sensor (CIS) test equipment (such as Advantest) capital expenditures (CAPEX) to 40%. Analyst Nam explained, "Previously, under the assumption of a 30% ratio, we estimated annual sales for this segment at 60 billion won. While the average incremental sales-to-CAPEX ratio for Doosan Tesna since 2019 has been about 36%, during the 2019–2021 period, when CIS investments expanded, the conversion ratio reached approximately 45%. In the early 2020s, there was high demand for 10–20 million pixel CIS, whereas for North American customers, CIS demand is estimated at 50 million pixels. Since lower pixel counts mean shorter test times, we have estimated the sales conversion ratio at 40%." He added, "Starting in 2027, the operation of CIS test equipment for North American clients is expected to generate an annual incremental sales increase of 80 billion won."

The sales conversion ratio for system-on-chip (SoC) test equipment (such as Teradyne) CAPEX was also raised to 50%. Analyst Nam said, "Since Doosan Tesna had almost no artificial intelligence (AI) processor volume, we referred to the incremental sales-to-CAPEX ratio of Taiwan's King Yuan Electronics (KYEC) to estimate the conversion ratio." He continued, "KYEC began increasing its AI and high-performance computing (HPC) chip volume from 2024, with that segment's 2025 sales growing by over 95% year-on-year. KYEC's incremental sales-to-CAPEX ratios for 2024 and 2025 are 37.1% and 54.4%, respectively. Taking this into account, we estimate the annual sales from language processing unit (LPU) testing for North American customers as 50% of the investment amount (190.9 billion won)." Accordingly, the annual sales from this segment, to be fully reflected in 2027, are projected at 95 billion won.

Doosan Tesna's first quarter results this year fell short of market expectations. In the first quarter, Doosan Tesna posted sales of 76.8 billion won, a 29.6% increase year-on-year, and turned to an operating profit of 5.5 billion won. However, this figure was 33.1% below the consensus (the average forecast of securities firms). Analyst Nam said, "The drop in mobile AP utilization rates increased the burden of fixed costs." He added, "Nevertheless, the market's focus regarding Doosan Tesna is on the scale of its earnings growth projected for 2027."

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