Meritz Securities announced on September 21 that it has raised its target price for Haesung DS from 70,000 won to 77,000 won, citing the company's investment in package substrates as a means to overcome existing growth limitations and trigger a re-rating of its valuation. The investment recommendation remains at 'buy.'
Yang Seung-soo, a researcher at Meritz Securities, stated, "This investment announcement is expected to mark the beginning of a re-rating of the company's valuation," adding that the target price was adjusted to 77,000 won to reflect a 12.9% upward revision in the estimated operating profit for 2027.
Yang also projected that the company's third-quarter performance would continue to improve, estimating consolidated sales of 250.2 billion won and operating profit of 34.5 billion won, which would exceed market consensus by 4.1% and 1.3%, respectively. He noted that the lead frame segment is expected to achieve record sales again, driven by the expansion of production capacity and increased demand for data centers focused on Chinese OSAT.
He anticipates a recovery in the package substrate segment as well, predicting that large-scale orders for D1C from domestic clients and price increases for Chinese customers will lead to a turnaround after three quarters. The new product, HeatSlug, is also expected to contribute to sales starting in the third quarter as deliveries for smartphone semiconductors commence.
Yang highlighted the expansion investment as a long-term growth driver, explaining that the 190 billion won investment in panel technology aims to meet the high-end package substrate demand for DDR6, LPDDR6, and GDDR7. After the investment is completed, the production capacity for package substrates is expected to increase from the current 300 billion won to between 500 billion and 600 billion won.
He added, "The existing reel-to-reel process has limitations in addressing multilayer substrates exceeding two layers, which has acted as a discount factor in terms of long-term growth potential. This panel technology investment is expected to be a turning point in overcoming existing growth limitations by enabling an expansion of the product mix into high-end package substrates and responding to new demand."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.