[Click eStock] "Soulbrain, Record-Breaking Performance Expected Next Year... Best Time to Buy"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] DB Financial Investment maintained a buy rating and a target price of 380,000 KRW for Soulbrain on the 25th, expecting the company to achieve record-high performance next year.

Soulbrain's expected sales for the fourth quarter are 281.6 billion KRW, and operating profit is 53.1 billion KRW, continuing its growth trend. These figures represent upward revisions of 17.6% and 6.8%, respectively, compared to the same period last year.

Researcher Eo Gyu-jin of DB Financial Investment explained, "Although profitability of secondary battery materials continues to be weak due to raw material costs, the growth of semiconductor materials is accelerating as domestic memory companies maintain solid shipments, and the operation of Samsung Electronics' Xian 2 and Pyeongtaek 2 lines, newly invested in the first half, along with the completion of migration of existing lines, is underway."

Soulbrain's annual performance next year is expected to reach sales of 1.16 trillion KRW and operating profit of 241.8 billion KRW, increasing by 11.7% and 22.6%, respectively, compared to the same period last year, achieving record-high results. This is because Samsung Electronics' new 3D NAND investments of about 110,000 to 120,000 units executed from last year through the first half of this year have led to a full-scale increase in semiconductor material supply, which also raises expectations for normalization of profitability in secondary battery materials. Samsung Electronics' new U.S. foundry plant expansion is also expected to lead to full-scale sales of the company's 3nm GAA process etchant.

Looking at Soulbrain's stock price so far, despite favorable performance due to the memory boom and the surge in domestic secondary battery material companies' stock prices, the company has been relatively neglected compared to other material companies due to company splits and raw material cost issues. The company's price-to-earnings ratio (PER) based on next year is only 12.8 times.

Researcher Eo said, "Performance improvement continues due to increased memory demand from customers," and analyzed, "Performance growth driven by increased supply of semiconductor and secondary battery materials will continue in the mid to long term."