[Click eStock] "DNF, Strong Performance to Continue in Second Half... Trend of Increasing Supply of Core Materials"

[Asia Economy Reporter Lee Jung-yoon] Shinhan Financial Investment forecasted on the 13th that DNF will continue to see strong performance in the second half of the year, following the first half, driven by an increasing trend in the supply of key materials.

DNF's sales in the first half of this year reached 69 billion KRW, up 23.2% compared to the same period last year, and operating profit rose 137.7% to 8.8 billion KRW. This performance was driven by increased supply of key materials such as High-K and new semiconductor materials.

The scale is expanding mainly around High-K, which is used as a sacrificial film material DPT for patterning to implement fine patterns, capacitor dielectric films, and Metal Gate insulating films. In the first half, sales by item recorded 13.4 billion KRW for the DPT segment, up 3.8% year-on-year, and 12.5 billion KRW for the High-K segment, up 22.5%. In the second half, DPT volume is expected to increase, leading the growth trend.

As the fine line width process increases in DRAM production, demand for sacrificial film material DPT for multi-patterning and high dielectric constant High-K precursors is also increasing proportionally. After equity investment by front-end customers, the trend of increased supply of key materials has been confirmed, and it is analyzed that significant benefits are possible due to increased demand for fine processes centered on DDR5 in the future.

DNF's sales for this year are estimated at 146.9 billion KRW, up 15.6% from the previous year, and operating profit is expected to increase 80.1% to 20 billion KRW. With production capacity (CAPA) expansion in 2023 and new item expansion in 2024, it is expected to enter a phase of stable external growth and expanding profit momentum every year.

Hwang Seong-hwan, a researcher at Shinhan Financial Investment, explained, "Due to the nature of material companies, it takes time to combine dozens of chemical recipes and stabilize physical property tests, but once applied, they can be supplied continuously for a long time," adding, "In the High-K segment, since the localization ratio of front-end customers is low, we can expect not only benefits from increased front-end demand but also market share expansion."

He added, "In addition, since advanced development is underway in various sectors such as display materials and new semiconductor materials, continuous attention is necessary."