[Click e-Stock] "TES to Benefit from SK Hynix Factory Expansion"

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On May 26, Hana Securities stated that semiconductor equipment manufacturer TES is expected to benefit from the expansion of SK Hynix's factories, maintaining a 'BUY' investment rating and setting a target price of 34,000 won.

The semiconductor manufacturing process is largely divided into the front-end process, where wafers are processed to create chips, and the back-end process, where the finished chips are assembled and tested. TES manufactures PECVD (Plasma Enhanced Chemical Vapor Deposition) equipment, which is used for thin film formation in the front-end process, as well as Gas Phase Etch & Cleaning equipment, which is used for dry etching.

Hana Securities predicted that DRAM equipment manufacturers will benefit because SK Hynix will be setting up equipment for its new 15x plant from the fourth quarter of this year through the first quarter of next year. SK Hynix's capital expenditure (CAPEX) for this year is estimated to surge by 67% year-on-year to 27 trillion won.

As of last year, TES's share of SK Hynix DRAM equipment increased from around 30% to 47%, making SK Hynix its largest customer. The proportion of TES's business in the NAND sector decreased from 62% to 23% last year, while the DRAM sector grew significantly from 38% to 77%.

Kim Rokho, an analyst at Hana Securities, analyzed, "Currently, the most visible demand in the memory market is for HBM, so TES is expected to benefit from SK Hynix's new DRAM investments." TES's sales this year are forecast to increase by 24% year-on-year to 298.8 billion won, with operating profit expected to rise by 42% year-on-year to 54.6 billion won.

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