Shinhan Investment Corp. analyzed on the 23rd that AD Technology is at a point where signals of a performance turnaround are visible. They presented a 'Buy' investment rating and a target price of 52,100 KRW.
AD Technology was established in 2002. It was selected as a Value Chain Associate (VCA) of TSMC in 2009 but ended its relationship with TSMC in 2019 following the launch of Samsung Electronics' foundry ecosystem, SAFE.
Seongkyu Heo, a researcher at Shinhan Investment Corp., stated, "The fundamentals of a design house are judged by its workforce and IP portfolio," adding, "Considering the target workforce of 1,000 employees by 2025 and foundation and interface IPs, AD Technology possesses the highest level of development and production capacity (Capa) among Design Solution Partners (DSP), yet its stock price remains relatively low compared to competitors in the industry."
He explained, "After switching to Samsung Electronics in 2020, the company underwent a two-year process of learning and adapting to process information and began sales activities in 2023," and added, "During the VCA period, when designing SK Hynix's NAND, despite focusing mainly on turnkey projects, there was a high volatility in performance due to the memory market conditions, which led to a multiple discount factor."
He emphasized, "Signals of a turnaround are being detected, such as turnkey orders in North America in the first half of this year and the appearance of the first mass production client in the second half," and stressed, "Considering trends in IP purchase amounts, changes in contract assets and liabilities, and the proportion of mass production and development sales, the financials are also observed to be at a turning point."
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