[Click eStock] “Haesung DS, 4Q Earnings Exceed Consensus”

Despite Bottlenecks, Record-High Profitability Expected for H1
Hana Financial Investment "Haesung DS Target Price Raised from 75,000 KRW to 80,000 KRW"

(Provided by Hana Financial Investment)

[Asia Economy Reporter Gong Byung-sun] Haesung DS's fourth-quarter performance last year is expected to exceed market consensus. Despite bottlenecks in the first half of this year, profitability is projected to improve.

On the 18th, Hana Financial Investment estimated Haesung DS's fourth-quarter sales last year at 187.6 billion KRW, a 65% increase compared to the same period last year, and operating profit at 29.9 billion KRW, a 391% increase over the same period. These figures exceed the consensus by 8% and 7%, respectively.

The strong performance of package substrates and automotive lead frames is expected to contribute to the results. Sales of package substrates and automotive lead frames increased by 8% and 20%, respectively, compared to the previous quarter. In particular, sales in the automotive lead frame segment, which had stagnated at 53.4 billion KRW in both the second and third quarters of last year, showed a significant increase in the fourth quarter, dispelling related concerns.

Profitability is expected to reach an all-time high in the first half of this year. Kim Rok-ho, a researcher at Hana Financial Investment, explained, "Until the second half of this year, it will be difficult to see remarkable sales growth due to responses focused on resolving bottlenecks within limited production capacity," but added, "The product mix will continue to improve through an increased proportion of high value-added products due to tight supply and demand." Hana Financial Investment estimates Haesung DS's operating profit margin this year to rise by 4.4 percentage points from the previous year to 17.6%.

Accordingly, Hana Financial Investment maintained its 'Buy' rating on Haesung DS and raised the target price from 75,000 KRW to 80,000 KRW. Researcher Kim said, "The production facilities currently under expansion will contribute to performance starting in the second half of this year," and added, "Among domestic automotive IT parts companies, it stands out." The closing price on the previous day was 56,000 KRW.