[Click e Stocks] "Simtek, Expected Best Performance This Year... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Daishin Securities forecasted on the 4th that Simtek will break its record high performance again this year following last year, and raised the target stock price from the previous 44,000 KRW to 56,000 KRW. The investment opinion was maintained as 'Buy.'

Simtek's fourth-quarter performance last year is expected to exceed market expectations (consensus). Daishin Securities predicted that Simtek's consolidated operating profit for the fourth quarter would increase by 320% year-on-year to 61.9 billion KRW, surpassing the consensus of 59.6 billion KRW. Sales were estimated to increase by 42% to 395.8 billion KRW. Kangho Park, a researcher at Daishin Securities, explained, "The increase in sales centered on high value-added products such as Flip Chip Chip Scale Package (FC CSP) and Multi-Chip Package (MCP), along with improved operating profit margins, is estimated to have exceeded the consensus for two consecutive quarters," adding, "Compared to domestic competitors, the portfolio composition focusing on semiconductor printed circuit board (PCB) sales and memory modules such as DDR4 is differentiated, leading to record-high sales and operating profit in the fourth quarter and annually last year."

The record-breaking performance is expected to continue this year as well. Due to the continued supply shortage of Flip Chip Ball Grid Array (FC BGA) and the acceleration of 5G mobile transition, the supply capacity of semiconductor PCBs is expected to be insufficient compared to demand. Simtek is expected to see increased orders centered on MCP, FC CSP, and GDDR6 products due to the trickle-down effect, and the mix effect is likely to continue this year. Researcher Park predicted, "Considering the transition of memory from DDR4 to DDR5, total sales this year are expected to increase by 16.4% year-on-year to 1.59 trillion KRW, and operating profit is expected to rise by 33.2% to 211.5 billion KRW, setting a new record."

Researcher Park added, "Reflecting the upward revision of the fourth-quarter performance last year, the earnings per share (EPS) for 2021 and 2022 have been raised by 1.2% and 2.7%, respectively, and the target stock price was also increased by 27%," adding, "With a price-to-earnings ratio (PER) of 9.5 times this year, undervaluation continues compared to the industry and competitors, leaving room for further price increases."