[Click e-Stock] "Leeno Industrial Target Price Raised on Record-High Quarterly Outlook"

On July 10, DS Investment & Securities maintained its 'Buy' investment rating on Leeno Industrial and raised its target price to 58,000 won, stating that "record-high quarterly results are expected."

Kim Jinhyung, a researcher at DS Investment & Securities, projected that Leeno Industrial's second-quarter sales would reach 95.7 billion won, up 22% from the previous quarter and 35% from the same period last year. Operating profit is also expected to be 44 billion won, representing a 26% increase from the previous quarter and a 33% rise year-on-year. The operating margin is anticipated to reach 46%.

Kim explained, "Although the second quarter is seasonally a period of increased sales, mass production sales for mid- to low-priced smartphones, as well as increased simulation for new device testing and research and development (R&D) volumes, are expected to make significant contributions to the results." He added, "It appears that sales for mobile applications, which were mentioned in the first-quarter report as being affected by Iguhwanshin, are being reflected in the first-half results." He further stated, "We believe this positive impact will continue into the second half, and even considering seasonality, annual growth of over 20% is possible this year."

In particular, Kim emphasized, "Attention should be paid to new device R&D sales for new clients," and noted, "As B2C artificial intelligence (AI) demand increases, both the quantity and quality of Leeno Industrial's R&D test sockets continue to rise. This is a segment verified within the ASIC value chain."

For the third quarter, sales are expected to decline compared to the second quarter due to seasonality, but are forecast to reach 86.7 billion won, a 26% increase year-on-year, with operating profit at 38.2 billion won (operating margin of 44%). Kim noted, "Mass production sales for new application processors (AP) will also begin in the third quarter. The new sales will come from one of the AP clients that previously conducted R&D, and this client holds the top AP market share in the Chinese smartphone market. While initial sales volume will not be large, related mass production sales are expected to expand going forward."

For 2025, annual sales are projected at 334.8 billion won and operating profit at 148.9 billion won, each representing a 20% increase from the previous year. The relocation of a new factory is scheduled for the fourth quarter of 2026, and production capacity, currently at around 350 to 400 billion won, is planned to be expanded to 900 billion won by 2027. Kim concluded, "Considering Leeno Industrial's profit-generating capacity and the anticipated sales level after 2027, applying a valuation multiple of over 30 times is reasonable."