[Click eStock] "Doosan Tesna, Automotive SoC Drives Performance"

Hana Securities issued a report on Doosan Tesna on the 28th, forecasting that "2024 will be driven by automotive SoCs (System on Chips)."

Doosan Tesna is an OSAT company specializing in testing system semiconductors such as CIS, mobile AP, and automotive SoCs, and was incorporated into the Doosan Group in April 2022.

The test unit price structure reflects the testing time and equipment cost. Since having more equipment increases the likelihood of receiving larger volumes, a significant scale of Capex must be continuously executed whenever new products are launched, which constitutes the entry barrier in the semiconductor testing industry.

From the customer's perspective, outsourcing testing to a company that provides turnkey services from packaging to testing offers the advantage of reducing transportation costs. Accordingly, Doosan Tesna acquired the post-processing company Engion in January with the goal of providing turnkey services and is estimated to consider additional M&A. Furthermore, Doosan Tesna is expected to benefit from increased volumes around late 2025 to 2026 due to domestic automakers’ in-house SOC development, as it serves as the sole supplier for automotive SOC testing within its customers.

Doosan Tesna recorded consolidated sales of 91.8 billion KRW and operating profit of 11.2 billion KRW in Q1 2024. On a separate basis, sales were 88.5 billion KRW and operating profit was 12.2 billion KRW. The acquisition of the recognition company Engion at the end of January was consolidated, reflecting an operating loss of 1 billion KRW. Sales composition by product was 39% mobile CIS, 36% SOC, and 25% others. Although the operating rate decreased compared to the previous quarter due to the fading effect of the Galaxy S24 launch, the operating rate of automotive SOC was maintained at 80-90% from February, easing seasonality. Operating profit decreased compared to the previous quarter due to low automotive SoC operating rates in January caused by customer process improvements and a 67% year-on-year increase in labor costs, which amounted to 17.5 billion KRW.

Doosan Tesna’s separate sales for 2024 are projected to reach 404.9 billion KRW with an operating profit of 70 billion KRW. Automotive semiconductor testing is expected to drive both top-line growth and profitability improvements. This is because, following customer process improvements starting in Q4 2024, both the volume and time of automotive semiconductor testing increased. Capex in 2024 is expected to be at the same level as the previous year, with a high proportion used for equipment purchases for automotive SOC testing. In the second half of the year, when equipment setup is completed, the share of high-margin automotive testing sales is expected to increase further. Mobile SOC and CIS traditionally experience a low season in the first half of the year with operating rates around 60%, but the effect of new mobile AP and CIS product launches is expected to be reflected in Q4.