[Click e-Stock] "Hanamicron Achieves Both Top-Line Growth and Earnings Improvement... Target Price Up 41%"

[Asia Economy Reporter Jihwan Park] Korea Investment & Securities announced on the 27th that it maintains a 'Buy' rating on Hanamicron, stating that increased investment from this year will lead to top-line growth and improved performance, and raised the target price by 41% to 24,000 KRW.

Researcher Yerim Lim of Korea Investment & Securities said, "We raised the estimated 2022 controlling shareholder equity per share (BPS) by 18% and increased the target price-to-book ratio (PBR) from 3 times to 3.5 times," adding, "The target market capitalization is 760 billion KRW." The target PBR of 3.5 times corresponds to the upper band average PBR in 2019 when Nepes and LB Semicon began full-scale test capacity expansion. In 2019, the BPS of Nepes and LB Semicon increased by 25% and 28%, respectively, and Hanamicron's BPS is expected to increase by 11% and 26% this year and next year.

There is an analysis that increased investment from this year will lead to top-line growth and improved performance. Researcher Lim said, "It is not easy to estimate Hanamicron's consolidated performance because subsidiaries such as Hanamaterials, the Brazil corporation, and the Vietnam corporation account for a large portion of sales, and there are many non-operating factors such as bad debts and foreign exchange." The separate operating profit margin this year is expected to exceed 5% for the first time since 2014, and with the increasing proportion of test sales, the operating profit margin is forecasted to rise further to 7.7% next year.

Hanamicron announced a new non-memory test facility investment worth 150 billion KRW. This is due to Samsung Electronics' expansion of outsourcing for non-memory back-end processes. He said, "The additional applications are RF and AP package tests, and although the number of testers is higher for RF, the investment amount is estimated to be similar," adding, "With this expansion, new test sales next year are expected to be 49.3 billion KRW annually, and operating profit 9.1 billion KRW, contributing to sales from the first quarter." The proportion of test sales is expected to rise from 9% this year to 18% next year, and the operating profit ratio is predicted to reach 45%.