[Click eStock] "Haesung DS, Slower-than-Expected Earnings Recovery... Target Price Down"

On the 6th, iM Securities downgraded the target price of Haesung DS to 46,000 KRW, citing that although it has undervalued appeal, the pace of performance improvement is slower than initially expected. The investment opinion was maintained as 'Buy.'

Researcher Song Myung-seop stated, "A gradual recovery in performance is expected in the second half of this year, but the improvement pace is anticipated to be slower than initially expected," adding, "Sales in the lead frame segment are expected to slightly increase as customers complete inventory adjustments."

He further explained, "However, the package substrate segment is judged to have low visibility for performance improvement due to continued weak demand in the existing IT sector and stagnation in legacy DRAM production caused by increased HBM production."

He added, "We estimate third-quarter sales and operating profit to increase by 4% and 11% quarter-on-quarter to 160.1 billion KRW and 20 billion KRW, respectively, but forecast FY24 sales and operating profit to decrease by 5% and 19% year-on-year to 640.8 billion KRW and 83 billion KRW, respectively."

However, he also noted that the current stock price is attractive, with a price-to-book ratio (P/B) below 1 at approximately 0.82 times.

Researcher Song said, "The current stock price corresponds to a price-to-earnings ratio (P/E) of 6.6 times and a P/B of 0.82 times based on this year's performance, which is historically the lowest level," emphasizing, "Therefore, although the recovery pace is slower than expected, it holds very high attractiveness from a valuation perspective."