[Click eStock] Haesung DS, Growth in Automotive Semiconductors... Target Price Up

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment raised the target price to 42,000 KRW on the 20th, citing the growth trend in the automotive semiconductor market and increased expectations for Haesung DS's earnings improvement.

Haesung DS is a manufacturer of lead frames and package substrates, which are components and structural materials necessary for semiconductor packaging. It ranks 5th globally in lead frame market share. As of last year, the sales proportions of lead frames and package substrates were 68% and 32%, respectively. In particular, while the lead frame sales ratio between general IT and automotive sectors was similar at 51% and 49%, respectively, the automotive sector is expected to surpass from this year onward.

The company's sales increased by 66% over four years, from 276.2 billion KRW in 2016 to 458.8 billion KRW last year, and operating profit rose by 69% during the same period, from 25.8 billion KRW

to 43.5 billion KRW. Especially, automotive lead frame sales grew by 82%, from 84.7 billion KRW in 2016 to 153.7 billion KRW last year, driving overall corporate growth. The operating profit margin of automotive lead frames exceeded the company's five-year average operating profit margin of 9%, contributing more significantly to profitability stabilization," the report stated.

Analyst Kim Rok-ho explained, "Despite external variables such as exchange rate fluctuations and raw material prices, the stable profitability was maintained because the high-profit automotive lead frames firmly held their position. Considering the mid- to long-term growth potential of automotive semiconductors, we believe Haesung DS's earnings will become more robust."