[Semiconductor Top Pick ③] Hana Micron... "Most Promising Growth Expected"

[Asia Economy Reporter Lee Seon-ae] #In recent years, the stock prices of memory companies have started to lead DRAM prices by more than six months. It is expected that DRAM prices will hit the bottom in the second quarter of next year, so it is judged that stock purchases should begin around November. The foundry market is also expected to continue its boom. If foundry companies do not mass-produce new semiconductors on time, fabless and finished product customers will face delays in product launch schedules. The foundry companies capable of implementing cutting-edge processes are narrowed down to TSMC and Samsung Electronics, and although Intel has declared participation, there is uncertainty due to the need for a verification period. For the time being, the investment and growth rate of foundry companies are expected to accelerate.

Hanwha Investment & Securities has presented Samsung Electronics as the top preferred large-cap semiconductor stock. With the timing to buy memory stocks approaching within 1-2 months, Samsung Electronics is considered a priority purchase target as it is showing performance improvements in foundry and smartphone businesses as well. For small and mid-cap stocks, Hanwha recommended mainly foundry post-process companies such as Hanamicron, Hanmi Semiconductor, LB Semicon, Techwing, and ISC.

According to Hanwha Investment & Securities on the 4th, Hanamicron’s stock price rose by 52% compared to the beginning of the year along with remarkable changes this year. It is considered a high-growth post-process company as it has succeeded in diversifying its product portfolio by expanding the non-memory segment and continuously receiving orders from customers. Lee Soon-hak of Hanwha Investment & Securities stated, "Among post-process companies, Hanamicron is recommended as the top preferred stock."

Supported by Samsung Electronics’ expansion of non-memory investments, Hanamicron announced a non-memory test facility investment of 150 billion KRW at the end of August. The main items are AP and RFIC, and it is scheduled to start operation early next year. Once this investment is completed, the production capacity based on sales for the test business is expected to reach 130 billion KRW. The test business is known to have relatively better profitability compared to the packaging business, so from next year, both external growth and margin improvement are expected to appear.

Based on separate accounting standards, the expected performance for this year is sales of 369 billion KRW and operating profit of 23 billion KRW. This is the same figure as projected in the previous report. Mobile memory products, which performed well in the first half, are expected to continue their strong performance in the second half, and server packaging volume is also expected to be favorable until the third quarter. In addition, the operating rate of the test business has recovered to over 70% since August, so the second half performance is expected to show growth in both quantity and quality.

Currently, negotiations are underway to expand additional customer volume. Although nothing has been finalized yet, discussions are ongoing with major domestic customers regarding memory post-process consignment contracts, and the possibility is still considered open. Samsung Electronics accounted for 80% of the memory post-process business, but if this negotiation is finalized, it is expected to change to a balanced customer composition.

Researcher Lee emphasized, "In the mid to long term, it is judged that Hanamicron will show the most outstanding growth among post-process companies by expanding scale through memory post-process and improving profitability through non-memory post-process."