[Click eStock] Nepes Begins Recovery in PMIC Packaging and Testing

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 17th that it maintains a Buy rating and a target price of 43,000 KRW for Nepes.

Researcher Lee Subin of Daishin Securities explained, "The target price was calculated by applying a domestic and international post-processing companies' average price-to-earnings ratio (PER) of 25 times to the estimated 2022 earnings per share (EPS)."

The Q3 2021 results recorded sales of 107.4 billion KRW (14% QoQ) and an operating loss of 1.7 billion KRW (continued deficit). While sales exceeded estimates, operating profit fell short of expectations. The PMIC (Power Management Integrated Circuit) packaging division saw a recovery in operating rate, resulting in Nepes' standalone sales of 93.3 billion KRW (+22% QoQ). The reason for the operating loss falling short of estimates was due to the PLP division's operating deficit being larger than expected. The PLP division has not yet generated sales and is expected to be reflected in the first half of 2022 results.

Sharp growth of subsidiaries is also expected in 2022. Sales growth and deficit reduction are anticipated from the subsidiary Nepes Rawe (Fan-Out Packaging), and performance improvement is expected from Nepes Ark (Non-memory Testing). Additionally, sales growth in the core business is expected in 2022.

Researcher Lee stated, "PMIC is a product that causes shortages in non-memory semiconductor components, and customers are expected to actively expand production," adding, "The operating rate is expected to further increase in Q4 2021, and in 2022, growth is expected to accompany customers' expansion of AP production."