[Click eStock] "Korea Circuit, Semiconductor Package Substrate Storm Growth"

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 26th that it maintains a buy investment opinion and a target price of 31,000 KRW for Korea Circuit, expecting high growth from next year as semiconductor package substrate (FC BGA) sales begin in earnest.

Park Kang-ho, a researcher at Daishin Securities, stated, "It is estimated that the proportion of package substrate sales exceeded 50% (51.1%) for the first time in the second quarter on a separate basis this year," adding, "Next year, the proportion of package sales (separate basis), including FC BGA, is estimated to be 62.3%, which is a 20.1 percentage point increase compared to 41.2% last year (estimated 53.2% in 2022), marking a transition to a full-fledged growth industry and enabling further valuation upgrades."

FC BGA is a package substrate mainly applied to communication components, and expansion into home appliances and automotive sectors is expected. In Korea, the FC BGA business is operated only by Samsung Electro-Mechanics, Daeduck Electronics, and Korea Circuit.

Korea Circuit's package sales including FC BGA are expected to reach 454.1 billion KRW this year, surpassing the same period last year by 70.4%, and are projected to achieve 666.3 billion KRW (46.7%) next year. Researcher Park said, "The company's current consolidated price-to-earnings ratio (PER) is 5.6 times, and considering that the proportion of package sales including FC BGA exceeds 50%, it is judged to be undervalued."

The company's separate sales this year are expected to increase by 32% year-on-year to 854.2 billion KRW, and operating profit is projected to rise by 57.6% to 92.8 billion KRW. Next year, sales of 1.07 trillion KRW (a 25.3% increase from this year) and operating profit of 111 billion KRW (19.5%) are anticipated. Researcher Park stated, "Although increased depreciation expenses due to large-scale facility investments this year pose a burden, the expansion of sales reduces fixed cost burdens, and the increase in the proportion of FC series BGA such as FC BGA improves the mix, making operating profit growth possible."