[Click eStock] ISC, Earnings Expectations and Strong Stock Price Lead to 'Target Price Upgrade'

[Asia Economy Reporter Lee Seon-ae] Shinhan Investment Corp. announced on the 28th that it maintains a 'Buy' rating on ISC and raises the target price from 43,000 KRW to 49,000 KRW. This is based on the expectation of favorable stock performance due to increased earnings in the fourth quarter and next year.

ISC's fourth-quarter revenue is forecasted to increase by 25.4% year-on-year to 43.8 billion KRW, and operating profit is expected to rise by 65% during the same period to 13.9 billion KRW. Chanwoo Kim, Senior Researcher at Shinhan Investment Corp., stated, "Typically, the fourth quarter is a period when orders decrease due to the vacation season of overseas clients, and while concerns about front-end demand are clear, we expect performance improvement as clients prepare to launch new products," adding, "Despite being an off-season, solid performance is anticipated."

Next year, ISC's revenue is projected to increase by 16.4% from this year to 220.4 billion KRW, and operating profit is expected to rise by 12.7% to 76.9 billion KRW. This is a conservative estimate considering weak front-end demand.

He explained, "Although demand for memory sockets is expected to decline, benefits are anticipated from the long-awaited launch of new CPUs for servers by North American clients." The launch is expected in the first quarter of next year, and ISC is preparing to support the corresponding chips. The competitiveness of server-oriented DDR5 sockets is also understood to be very high. From the first quarter, demand for new non-memory and memory products is expected to increase, leading to noticeable performance improvements.

Researcher Kim said, "The target price increase reflects the valuation rise of leading companies and upward revisions of earnings per share (EPS) estimates. While concerns about front-end demand persist, the company's competitiveness is understood to be continuously improving." Although there is still some gap with leading companies, the markets they focus on differ. Leading companies are strengthening competitiveness in wearables and AR/VR devices, whereas ISC is focusing on securing and enhancing competitiveness with server clients. He emphasized, "Good stock performance is expected due to expanded non-memory competitiveness and DDR5 momentum."