[Click e-Stock] "TLV Expected to Further Improve Profitability in H2... Target Price Raised"

Target Price Raised from 81,000 Won to 84,000 Won

On the 25th, NH Investment & Securities raised its target price for TLV from 84,000 won to 81,000 won, projecting that profitability will further improve in the second half of the year. It maintained its investment rating of "Buy."

Jihyun Hwang, an analyst at NH Investment & Securities, explained, "The target price increase is due to the upward revision of the 2026 earnings forecast, reflecting additional capacity expansion focused on high value-added products," adding, "Recently, the market has shown a preference for industries facing supply shortages, and share prices of companies belonging to the multilayer ceramic capacitor (MLCC) and flip chip ball grid array (FC-BGA) value chains have been strong. The memory module substrates produced by TLV are also expected to benefit in a similar way from the trend toward higher specifications."

In the fourth quarter of last year, TLV posted revenue of 72.6 billion won, up 45.6% year-on-year, and operating profit of 8.6 billion won, up 844.1% year-on-year, in line with the consensus (the average of securities firms' forecasts). Hwang commented, "Despite concerns over rising raw material prices, the company maintained solid profitability," and analyzed, "Demand for memory module substrates remains robust, centered on DDR5, and the share of DDR5 in total sales steadily increased from 32% at the end of 2024 to 68% at the end of 2025." She added, "In particular, the share of high value-added products (DDR5-6400, 7200) using the BVH (Buried Via Hole) process rose from 35% at the beginning of the year to 81% by year-end, driving a rapid improvement in profitability."

DDR5-8000 is expected to complete development in the second quarter of this year and enter full-scale mass production in the second half. Hwang said, "The rising share of high value-added products will help ease the downward pressure on profitability caused by higher raw material prices," and continued, "Investments in the second Ansan plant and the Vietnam line are proceeding as planned, and mass production could begin as early as the second quarter after equipment setup is completed in March-April. The expansion of production focused on DDR5-6400 and 7200 is expected to lead to a better product mix in the second half."

The recent sideways movement in the share price is seen as a buying opportunity. Hwang noted, "In future SOCAMM and DDR6, the stacking process will be repeated five times, which will make the process more complex compared with the existing BVH process based on three-time stacking," and added, "Accordingly, we believe the risk of bottlenecks will increase, and given this structural benefit, the recent sideways share price movement represents a buying opportunity."