[Click eStock] Isu Petasys, Uncertainty Grows Due to Rights Offering... Target Price Lowered

Kiwoom Securities lowered the target price of Isu Petasys to 45,000 KRW on the 15th, citing corporate acquisitions and large-scale rights offerings as elements of uncertainty. The investment rating was maintained at 'Buy.'

Kim Sowon, a researcher at Kiwoom Securities, stated in a report released that day, "The stock price plummeted after the announcement of the rights offering, trading at a 12-month forward price-to-earnings ratio (PE) of 13 times. However, the large-scale rights offering to acquire a company with limited direct synergy remains an uncertainty, and more proactive efforts to enhance shareholder value are deemed necessary."

Isu Petasys recorded third-quarter sales of 206.4 billion KRW, a 24% increase year-on-year, and operating profit of 25.9 billion KRW, a 97% growth over the same period, falling short of market expectations of 34.6 billion KRW.

Researcher Kim Sowon explained, "Sales continued to expand the proportion of high value-added products such as artificial intelligence (AI) accelerators and network switches. The third-quarter operating profit margin was 12.6%, which fell short of expectations despite the increased share of high value-added products. This was due to the initial yield of the new 800G product being 63%, which was sluggish, and the reflection of temporary cost increases such as facility relocation."

He anticipated the fourth quarter to see the largest order volume ever. Kim Sowon said, "Recently, approval was obtained for mass production of next-generation GPU-oriented UBB for company N, with full-scale production scheduled from January next year. The core business is experiencing an unprecedented boom." Accordingly, operating profit in 2025 is expected to increase by 62% year-on-year to 178.3 billion KRW, with strong demand for AI accelerators and the emergence of the 800G network market leading to record-high performance.

He added, "Currently, tests of next-generation products are also underway with numerous clients, and along with capacity expansion, mid- to long-term performance growth is expected to continue."