[Click eStock] "Unique Portfolio... ISC, Target Price Raised"

Meritz Securities on the 16th raised the target price for ISC, a global semiconductor test component company, from 77,000 KRW to 88,000 KRW, maintaining a buy rating. They stated, "This year, ISC is expected to build a unique portfolio including Graphics Processing Units (GPU), Application-Specific Integrated Circuits (ASIC), and High Bandwidth Memory (HBM)." The previous day's closing price was 73,900 KRW.

On the same day, Kim Dong-kwan, a researcher at Meritz Securities, said, "We maintain a positive investment opinion as differentiated benefits are possible within the Artificial Intelligence (AI) cycle."

Last year's fourth-quarter revenue is expected to be 45.4 billion KRW, and operating profit 12.2 billion KRW, representing increases of 82% and 395% respectively compared to the same period last year, in line with market consensus. Data center revenue continued to grow compared to the previous quarter, and AI GPU revenue is expected to grow significantly due to strong demand and expanded production capacity of customers.

Researcher Kim noted, "The AI GPU revenue ratio will exceed 40% for the first time," adding, "It is understood that mass production sales of Neural Processing Unit (NPU) sockets have occurred to new big tech (large information technology companies)." In terms of profitability, labor costs will rise due to performance bonuses, and the impact of weak memory will keep profitability at the previous quarter's level.

This year's expected revenue is 231.9 billion KRW, and operating profit is 69.6 billion KRW, representing increases of 28% and 41% respectively compared to last year. Researcher Kim said, "The core of growth this year is also the data center," adding, "Demand for AI GPU sockets will continue to grow due to the expansion of customers' advanced packaging production capacity."

He also said, "Shipments of NPU sockets to new big tech customers will be reflected. In the first quarter of this year, shipments of HBM test solutions to leading HBM companies are expected to begin," adding, "Although the memory market downturn continues, profitability will improve as the proportion of AI semiconductors expands."