[Click eStock] LB Semicon, Operating Rate Decline Ends, Bottom Passed 'Stock Price Breaks Box Range'

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment stated on the 16th that attention should be paid to LB Semicon, a non-memory semiconductor stock. However, no investment opinion or target price was provided.

LB Semicon primarily operates in semiconductor bumping, testing, and assembly. Its first-quarter performance recorded sales of 113.9 billion KRW and operating profit of 10.6 billion KRW, showing operating profit exceeding 10 billion KRW even during the off-season. The second-quarter performance is forecasted at sales of 121.5 billion KRW and operating profit of 12.1 billion KRW. The increase compared to the previous quarter is due to steady demand for display driver ICs and image sensors. The year-on-year performance increase (sales of 106.7 billion KRW, operating profit of 8.1 billion KRW) is also attributed to strong demand for display driver ICs and image sensors. Overall, the company was affected by the Austin cold wave in April, but operating rates improved in June, showing a better trend from the first half to the second half of the second quarter.

The product with the highest proportion of LB Semicon's sales is the display driver IC. Demand for display driver ICs is solid. The transition to OLED in the upstream industry, increased consumption of stay-at-home content, and expanded preference for large screens are driving demand for display driver ICs. Besides display driver ICs, products affecting performance and stock price include image sensors, application processors, and power chips. Image sensors began contributing to sales from 2021 and have shown positive signs with increased operating rates since the latter half of the second quarter. Meanwhile, sales contributions from application processors and power chips remain limited. However, the first half was affected by the Austin cold wave, and based on current data, operating rates are no longer declining, indicating the bottom has been passed. Researcher Kim Kyung-min of Hana Financial Investment said, "Reflecting these market conditions comprehensively, we expect the 2021 annual performance to be sales of 510.1 billion KRW and operating profit of 50 billion KRW."

Korean companies responsible for semiconductor back-end processes like LB Semicon received less attention in the first half due to the Austin cold wave but have escaped the neglected phase as signals confirming that operating rates are not declining have become clear. Due to persistent concerns about peak-out in the memory semiconductor sector, interest in non-memory semiconductor stocks has increased since July. Researcher Kim emphasized, "Among small and mid-cap stocks, most companies have a high sales proportion related to memory semiconductors, so there are not many pure players in the non-memory semiconductor sector like LB Semicon. Therefore, investor interest is expected to grow further."