[Featured Stock] HPSP, Global Monopoly Dominance and Industry-Leading Profitability... 50% Annual Growth

[Asia Economy Reporter Hyungsoo Park] HPSP, a monopoly company in high-pressure hydrogen heat treatment equipment, is showing strong performance. Securities firms' analysis that sales will steadily increase seems to be influencing the stock price.

At 9:50 AM on the 19th, HPSP was trading at 60,000 KRW, up 16.89% compared to the previous trading day.

Hyundai Motor Securities forecasted that HPSP's sales will increase not only in foundry but also in memory companies due to technological advancement toward 3D architecture and the development of semiconductor processes becoming finer. They issued a 'Buy' investment opinion with a target price of 82,000 KRW.

Minjung Kwak, a researcher at Hyundai Motor Securities, explained, "Recently, as semiconductor fine process technology has reached its limit, the application of high-K is expanding," adding, "In high-K, there exists interfacial charge about 10 to 100 times higher than the existing SiO2 before heat treatment."

She continued, "The high-temperature forming gas heat treatment process applied to high-K insulating films can passivate interfacial charges," and added, "However, due to thickness increase caused by the high-temperature process, issues such as deterioration of leakage current characteristics arise, making it essential to maintain low-temperature processes."

Researcher Kwak emphasized, "HPSP commercialized high-pressure hydrogen annealing equipment that enables low-temperature processes by increasing gas concentration under high pressure to solve these problems," and explained, "It is designed with a closed structure that can raise the pressure level up to 25 ATM and maximize hydrogen concentration to 100%."

It is estimated to achieve sales of 131.1 billion KRW and operating profit of 100.3 billion KRW this year, representing increases of 42.9% and 121.7%, respectively, compared to last year. Researcher Kwak analyzed, "With monopolistic global market dominance and technological superiority, as advanced processes in foundry and memory continue, sales growth potential will increase," and added, "The target price was calculated with a 10% discount compared to the price-to-earnings ratio (PER) of 15.0 times of the world's top 4 semiconductor equipment companies."

He explained, "In addition to possessing monopoly technology, HPSP has superior price negotiation power compared to other equipment companies based on equipment stability," and noted, "The average gross profit margin over the past five years was 56.9%."

He added, "Based on high profitability and technological capability, it is expected to grow at an average annual rate of over 50%," and said, "Investments for process miniaturization and yield improvement by upstream companies are continuing, so rapid growth will continue."