[Market Highlight] Neotis Hits Record High on Expectations of Supply Shortage Benefit for PCB Microbits

Neotis is showing strong performance in early trading.

As of 9:10 a.m. on January 21, Neotis was trading at 12,380 won, up 8.98% (1,020 won) from the previous day, marking a new 52-week high.

Recently, demand for high-layer and high-difficulty printed circuit boards (PCBs) has been increasing due to the rise of artificial intelligence (AI) servers, which is expected to drive improved earnings for Neotis by creating a supply shortage of microbits for PCBs produced by the company. Microbits are ultra-precision consumable cutting tools used for PCB processing, responsible for hole drilling and slot cutting during the manufacturing of electronic components.

Kim Jongbae, a researcher at Hyundai Motor Securities, stated, "In the case of Topoint, a peer company in Taiwan, fourth-quarter sales increased by 41%, and Japan's Union Tool has implemented an unusual average price increase of 15-20% across all products." He added, "Given the stock price increases among peer groups and the favorable market conditions for drill bits, Neotis's stock remains excessively undervalued." Neotis's 12-month forward price-to-earnings ratio (PER) stands at 17 times, significantly lower than the global industry average of 34.6 times.

Kim further commented, "There is an ongoing global shortage of microbits for PCBs, and as a result, the company is seeing continued demand not only from existing clients but also from additional new customers." He predicted, "Even just meeting the demand from existing clients will push the utilization rate of the company's planned expanded production to its maximum." He raised the target price from 14,000 won to 15,500 won.