[Click eStock] "DB HiTek, Securely Secured Orders"

Concerns Over Recent Decline in Stock Market LDI Orders... Secured Orders Through Q3 Next Year
Shinhan Financial Investment "DB HiTek Raises Target Price from 80,000 Won to 84,000 Won"

[Asia Economy Reporter Gong Byung-sun] DB HiTek is expected to achieve a record quarterly performance again in the third quarter of this year. Orders secured through the second quarter of next year are identified as the growth driver.

On the 26th, Shinhan Financial Investment estimated DB HiTek's third-quarter sales to increase by 14% from the previous quarter to 313.1 billion KRW, and operating profit to rise by 29.9% to 105.7 billion KRW. These figures exceed the market consensus estimates of 300.6 billion KRW and 96.9 billion KRW by 4.15% and 9.08%, respectively.

Recently, the stock market has been concerned about a decrease in orders for LDI, a liquid crystal display (LCD) driver chip. This is due to oversupply in the LCD industry and a reduction in Samsung Electronics' LCD production capacity. Additionally, concerns about IT supply chain disruptions have arisen due to recent power restrictions in China.

However, DB HiTek is understood to have already secured orders for production volumes through the third quarter of next year. Currently, orders for non-memory semiconductors such as power management integrated circuits (PMIC) are rapidly increasing. Furthermore, the shortage of 8-inch foundry (semiconductor contract manufacturing) supply is expected to continue until the first quarter of next year, and upstream companies are proactively securing 8-inch foundry volumes.

(Provided by Shinhan Financial Investment)

Production capacity is also expected to increase. DB HiTek's production capacity was about 132K units per month until the second quarter of this year, but it is projected to rise to 145K units per month by the fourth quarter of next year. Choi Do-yeon, a researcher at Shinhan Financial Investment, forecasted, “Due to price increases and production capacity expansion, significant performance improvements will continue this year and next year.”

Accordingly, Shinhan Financial Investment maintained a ‘Buy’ rating on DB HiTek. The target price was raised from 80,000 KRW to 84,000 KRW. The closing price on the previous day was 55,900 KRW.