Meritz Securities announced on June 23 that it has raised its target price for Doosan from 2.4 million won to 2.6 million won, an increase of 8.3%, citing growth potential in the electronic materials division driven by the expanding optical module market. The firm maintained its "buy" rating on the stock.
Yang Seung-soo, a researcher at Meritz Securities, stated, "As the sophistication of optical modules intensifies, the structural bottlenecks in printed circuit boards (PCBs) and copper-clad laminates (CCLs) are expected to deepen, making CCLs for optical modules a new growth driver for Doosan's electronic materials division."
Meritz Securities forecasts that Doosan's electronic materials division will achieve second-quarter revenues of 651 billion won and operating profits of 200 billion won, representing year-on-year increases of 36.7% and 46.8%, respectively, with an operating profit margin of 30.7%.
Yang noted that despite rising prices for key raw materials, the overall industry is experiencing supply shortages, allowing for price pass-through and maintaining high profitability. He also mentioned that the average selling price (ASP) has risen since the launch of new products aimed at North American Nvidia customers in June.
The demand for high-speed optical communication is structurally increasing due to the expansion of AI data centers, highlighting the importance of PCBs and CCLs for optical modules. The proliferation of high-speed optical modules, such as 800G and 1.6T, is rapidly increasing the demand for ultra-low-loss CCLs alongside the rise in substrate layers.
Currently, Doosan's electronic materials division is estimated to hold the largest market share in the optical module CCL sector. In the first quarter of this year, sales for optical modules reached 34.4 billion won, more than ten times higher than the previous year, and annual sales are projected to increase 4.2 times year-on-year to 153 billion won.
Yang remarked, "While the electronic materials division shares the same industry upcycle as other CCL manufacturers and is recording overwhelming profitability, its stock price has remained relatively sluggish. There is ample room for stock price appreciation through a reevaluation of the electronic materials division in the future."
* This article has been translated by AI.
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