[Click eStock] "Daeduck Electronics, Expecting Record Quarterly Performance After 3Q Split"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained its 'Buy' rating and target price of 24,000 KRW for Daeduck Electronics on the 28th, expecting the company to record its highest quarterly performance since the spin-off in the third quarter of this year.

Daishin Securities estimated that Daeduck Electronics' consolidated operating profit for the third quarter would reach 21.4 billion KRW, a 61.4% increase compared to the previous quarter. Kangho Park, a researcher at Daishin Securities, said, "This figure exceeds the previous estimate (19 billion KRW) and will mark the highest quarterly level since the spin-off in May last year," adding, "Sales are estimated to increase by 6.4% from the previous quarter to 245.4 billion KRW."

The factors behind this strong performance include the semiconductor industry's boom, increased sales of memory-oriented semiconductor printed circuit boards (PCBs), the new reflection of flip chip ball grid array (FC BGA) sales among non-memory semiconductor PCBs easing fixed cost burdens, and the price increase effects of some products such as flip chip chip scale packages (FC CSP). Additionally, the suspension of some low-profit automotive PCB businesses improved the operating profit margin in the multi-layer printed circuit board (MLB) segment.

The company is also expected to set a new record in the fourth quarter. Daishin Securities forecasted Daeduck Electronics' fourth-quarter sales and operating profit to be 251.5 billion KRW and 26.4 billion KRW, respectively, representing increases of 2.5% and 23% from the previous quarter. Researcher Park explained, "The operating profit margin will reach the 10% level for the first time," and "Earnings per share have been revised upward by 11.3% and 6.5% for 2021 and 2022, respectively."

Attention should be paid to full-scale growth starting next year. Researcher Park said, "Next year's sales are expected to increase by 22.9% year-on-year to 1.18 trillion KRW, and operating profit is forecasted to rise by 52.2% to 103.2 billion KRW," adding, "Following the 2018 merger with Daeduck GDS and the spin-off last year, the company is expected to enter its highest performance and full-scale growth phase." In particular, FC BGA is expected to enter its full-scale harvesting period. FC BGA sales next year are estimated at 135.9 billion KRW. Approximately 160 billion KRW of facility investment over about two years will translate into sales, and from the initial stage, stable yield acquisition and increased operating rates are expected to drive a significant rise in overall operating profit. Researcher Park predicted, "FC BGA sales will diversify from initial automotive applications to servers," and "Demand will surge due to autonomous driving and the electrification of automotive components."