[Feature Stock] RF Materials Surges 10% on Highlighted Lumentum Benefits

Shares of RF Materials are showing strong performance as the company is expected to benefit from the global optical communication components firm Lumentum.

As of 9:50 a.m. on November 20, RF Materials was trading at 17,800 won, up 1,620 won (10.01%) from the previous day.

On this day, Hana Securities maintained its "Buy" investment rating and target price of 30,000 won for RF Materials.

In the third quarter, RF Materials posted sales of 14.6 billion won, up 89% year-on-year, and an operating profit of 1.9 billion won, turning profitable. Kim Hongshik, an analyst at Hana Securities, said, "The company achieved a significant improvement in earnings, and this strong performance is expected to continue for the time being," explaining, "This is because demand for Lumentum's products is surging, driven by the global expansion of data centers."

He added, "Supply is failing to meet demand, and the shortfall widened in the third quarter compared to the previous quarter," and stated, "With the activation of hyperscale data centers and data center interconnect (DCI), the long-term outlook for demand for optical packages required for these applications is also positive."

Kim further commented, "In the long term, the need for optical amplifiers is increasing as hyperscale data centers and long-distance data center interconnects become more prevalent. Given that the United States is intensifying its restrictions on Chinese-made information technology (IT) components, the outlook for Lumentum's sales remains bright. Lumentum's growth will lead to RF Materials' growth, so an earnings surprise can be expected for the time being."