[Click e-Stock] "DB HiTek Expected to Benefit from Foundry Price Hike... Target Price Raised"

On January 27, DS Investment & Securities raised its target price for DB HiTek to 1,120,000 won, maintaining its buy rating, citing expectations of an increase in average selling price (ASP) due to supply shortages. The previous day's closing price was 907,000 won.

The company expects that as global 8-inch foundry supply contracts, price increases will spread across the industry. Lee Surim, a researcher at DS Investment & Securities, said, "TSMC is reducing 8-inch and mature process production to transition to advanced nodes, and it is known that Samsung's S7 line at the Giheung campus is scheduled for shutdown in the second half of 2026."

Another basis cited is that more than 65% of DB HiTek's sales come from China, where 8-inch foundry production capacity (CAPA) is high. Lee explained, "In China, 8-inch CAPA is concentrated in SMIC, Hua Hong, and CR Micro, with high utilization rates. SMIC is understood to have recently raised BCD ASP by 10%, and Nexperia's China subsidiary is also rapidly securing and validating a new local wafer supply chain for this year's production."

Lee added, "ASP is typically reflected one to two quarters later than utilization rates, but considering that the company's utilization rate has already been maintained at full CAPA (maximum production capacity) since the third quarter of last year, we can expect encouraging results from the second quarter price negotiations," adding, "Second half performance is also anticipated."

DS Investment & Securities estimates that DB HiTek's consolidated operating profit for this year will be 32.1 billion won, up 17% year-on-year. Lee noted, "Although we have conservatively assumed ASP growth for now, there is room for upward revision of estimates and margins depending on the ASP trend after the second quarter."