[Click eStock] "Haesung DS, 1Q Earnings Estimates Exceeded"... Target Price Up

by Lee Jungyun

Published 18 Apr.2022 07:42(KST)

[Click eStock] "Haesung DS, 1Q Earnings Estimates Exceeded"... Target Price Up

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained a buy rating on Haesung DS on the 18th, stating that the company's first-quarter earnings this year are expected to exceed estimates, and raised the target price from 88,000 KRW to 114,000 KRW.

Haesung DS's first-quarter sales this year were identified as 199.6 billion KRW, a 45% increase compared to the previous year, and operating profit was 48.3 billion KRW, a 376% increase. These figures exceed Hana Financial Investment's estimates by 5% and 35%, respectively. Kim Rok-ho, a researcher at Hana Financial Investment, explained, "Favorable exchange rates contributed to improved profitability," adding, "Both package substrates and lead frames experienced tight supply and demand conditions with favorable pricing, and the product mix also improved."

Due to Hana Financial Investment's strong first-quarter performance, the annual sales and operating profit forecasts were revised upward by 4% and 30%, respectively, to 812.1 billion KRW and 196.7 billion KRW. The performance for the second and third quarters of this year is expected to increase compared to the previous quarter.

Researcher Jung said, "Although concerns about demand slowdown in the downstream industries persist, the supply and demand situation for the components Haesung DS operates in is so tight that no decrease in orders from customers has been detected." He continued, "While pricing conditions are not expected to be as favorable as in the first quarter, the possibility of price declines is limited, and there remains potential for product mix improvement," adding, "Currently, expansion is underway and is expected to be completed in the third quarter, with effects reflected from the fourth quarter. However, considering year-end inventory adjustments, sales in the fourth quarter are expected to decrease compared to the previous quarter."

He further stated, "Haesung DS supplies high value-added products, such as automotive lead frames, to customers ranked among the global top five," adding, "The sales of these customers and Haesung DS's automotive lead frame sales inevitably move together, indicating very high mid- to long-term growth visibility."