[Click e-Stock] "Soulbrain Expected to Re-enter Growth with Q3 Turnaround"

Target Price Raised to 260,000 Won

On July 16, Kiwoom Securities raised its target price for Soulbrain to 260,000 won, stating, "We expect the company to re-enter a growth trajectory starting with a turnaround in the third quarter of this year."

Park Yuak, a researcher at Kiwoom Securities, projected that Soulbrain's operating profit in the third quarter would reach 45 billion won, up 41% from the previous quarter, marking a return to year-on-year growth. Park explained, "We expect positive effects from the consolidation of Sun Fluoro System, improved profitability in semiconductor materials, and the removal of one-off expenses that were reflected in the second quarter."

Sun Fluoro System, established in Japan in 1992, manufactures and supplies transportation containers and storage tanks for semiconductor materials, heat exchangers, and large lining pipes. Its major clients include global semiconductor companies such as TSMC. The consolidation of Sun Fluoro System is expected to boost short-term performance and, in the mid- to long-term, expand overseas sales to companies like TSMC.

For the fourth quarter, Park forecasted operating profit to rise 30% year-on-year to 47.2 billion won, with revenue increasing 14% to 246.5 billion won. He analyzed, "Driven by Samsung Electronics' mass production of first-generation nanometer (1cnm) DRAM and expanded HBM production, revenue in the semiconductor materials segment will grow 4% quarter-on-quarter. Although the display segment will decline due to the downsizing of the Thin Glass business, expectations for a restructuring of the secondary battery division could have a positive impact on the share price."

He assessed, "A low valuation with a 12-month trailing P/E of 10 times and P/B of 1.2 times, along with a 30 billion won share buyback and cancellation over the past three years, are also limiting downside risks for Soulbrain's share price." He added, "Alongside a rebound in second-half results, new material supplies for advanced processes (1cnm DRAM, HBM4, 10th-generation V-NAND, and 2-nanometer foundry) will serve as momentum for a share price recovery." He concluded by recommending Soulbrain as his top pick in the semiconductor materials sector.