[Click e-Stock] "ISU Petasys, Short-Term Concerns Easing...Time to Increase Holdings"

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On February 4, Hana Securities stated that short-term concerns over ISU Petasys are easing and that investors should consider increasing their holdings, while maintaining its "Buy" investment opinion and raising the target price to 160,000 won.

Kim Minkyung, an analyst at Hana Securities, explained in a report that day, "Fourth-quarter results last year fell short of our estimates due to a change, starting in December, in the revenue recognition standard for a key customer from the time of shipment to the time of receipt by the customer." She added, "The impact on revenue from this change in recognition standard is estimated at around 20 billion won, and some one-off expenses related to fourth-quarter performance bonuses were also reflected."

Kim said, "Despite the change in revenue recognition, sales of multilayer printed circuit boards (MLB) for switches and accelerators for major customers increased quarter-on-quarter, indicating that solid demand is continuing," and added, "In addition, the fifth plant, where the first phase of capacity expansion has been completed, is gradually ramping up. As multilayer MLB adoption becomes full-scale in the second half of this year, we expect steep earnings growth."

She projected, "This year, revenue is expected to reach 1.6233 trillion won (up 49.1% year-on-year) and operating profit 354.7 billion won (up 73.3% year-on-year)," and noted, "Compared with our previous estimates, we have revised up our revenue and operating profit forecasts by 5% and 11%, respectively."

She went on to stress, "With the application of multilayer (sequential) MLB confirmed for major customers' next-generation accelerators and switches, ISU Petasys is expected to maintain its position as a main vendor at those customers, and a sharp improvement in earnings in the second half is anticipated as 800G orders from network customers begin in earnest."

Kim added, "For 800G MLBs using multilayer processing, the average selling price (ASP) is about 2 to 3 times higher than that of 400G products, which will act as a positive factor for the company's overall profitability," and said, "ISU Petasys is in the process of expanding its production capacity in three phases. The first-phase expansion work at the Daegu Plant 5 has been completed, and additional expansion work is also progressing faster than planned."

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