[Click eStock] "Isu Petasys, Confidence in Strong AI Demand Behind 5th Factory Expansion"

Meritz Securities analyzed on the 23rd that the expansion of Isu Petasys' 5th factory reflects the company's confidence in the mid- to long-term artificial intelligence (AI) demand. The investment opinion 'Buy' and the target price of 66,000 KRW were maintained.

The day before, Daegu City announced that it had signed an investment agreement with Isu Petasys regarding the establishment of the 5th domestic factory. Isu Petasys plans to invest approximately 300 billion KRW, including a site of 21,344㎡ (6,468 pyeong) for the 5th factory.

Researcher Yang Seung-su of Meritz Securities explained, "Although there were recent market concerns about an AI peak out, this 5th factory expansion expresses the company's confidence in solid mid- to long-term AI demand," adding, "This 5th factory expansion is happening even before the completion of the 4th factory, and the timeline has been significantly advanced compared to the expansions of the 3rd and 4th factories."

He emphasized, "Considering the time required from the completion of the 4th factory to full operation, the 5th factory is expected to be completed and fully operational after the end of 2026," and added, "In other words, this expansion indirectly expresses high visibility of AI-related demand beyond 2026."

He explained, "Due to the increase in AI-related demand, many multi-layer printed circuit board (MLB) companies are expanding, but a tight supply-demand situation is maintained due to demand exceeding supply," and added, "This is because the number of layers in existing AI accelerators and networking-oriented boards is increasing to respond to faster data processing speeds."

Researcher Yang emphasized, "The key point of the 2nd quarter earnings announcements by big tech companies is the increase in AI Capex," and said, "The upward revision of AI Capex by tech companies ultimately means an increase in AI accelerator sales and demand for AI networking hardware products, so I judge that the visibility of Isu Petasys' AI demand expansion is very high in both the short and mid- to long-term."