[Click eStock] "1Q 'Earnings Surprise' Haesung DS to Maintain High Profitability"

[Asia Economy Reporter Myung-hwan Lee] Eugene Investment & Securities announced on the 21st that it maintains a buy rating and a target price of 92,000 KRW for Haesung DS. This is because the high profitability in the first quarter of this year is expected to continue through the second half.

The preliminary consolidated results for the first quarter announced by Haesung DS on the 15th showed sales of 199.6 billion KRW and operating profit of 48.3 billion KRW. Eugene Investment & Securities evaluated that this was an earnings surprise, significantly exceeding market expectations of 181.1 billion KRW in sales and 29.1 billion KRW in operating profit.

The high profitability in the first quarter is expected to continue into the second quarter and the second half. This is because the proportion of low-profit products is being reduced, and the average selling price (ASP) is rising due to the material price linkage effect, rapidly improving profitability. It was also noted as positive that supply plans for automotive lead frames are secured until the first quarter of next year, and supply volumes for IT device lead frames and package substrates are secured until the third quarter of this year.

The production capacity expansion due to the ongoing investment of approximately 50 billion KRW is expected to be reflected starting from the fourth quarter. It is analyzed that in the fourth quarter, sales could increase by about 20 billion KRW based on 60% operation, and from next year, it is expected to contribute to sales growth at a quarterly level of 30 to 40 billion KRW.

Eugene Investment & Securities forecasts the company's consolidated results for the second quarter of this year to be sales of 202.9 billion KRW and operating profit of 49.3 billion KRW. This represents increases of 27.3% and 170.3% respectively compared to the same period last year, and it is expected to break the highest sales record again.

Haesung DS recently also announced investment plans for mid- to long-term growth. The investment amount is estimated to be around 300 to 400 billion KRW over three years, with pure equipment investment expected to be about 200 billion KRW, according to Eugene Investment & Securities. Researcher Jong-sun Park of Eugene Investment & Securities evaluated, "This investment is positive as a mid- to long-term response to demand for automotive lead frames and memory package substrates."