[Click e-Stock] "AI Optical Modules Selling Out... RF Materials Target Price Raised"

Hana Securities announced on March 4 that it is maintaining its "Buy" investment rating on RF Materials and raising the target price to 80,000 won.

Kim Hongsik, a researcher at Hana Securities, stated, "The company is undervalued compared to global optical module makers," adding, "This year's price-to-book ratio (PBR) is between 4 and 5 times, but considering that the stock prices of peer group optical module companies such as Lumentum have surged recently, we have raised the target PBR to 10 times."

The recommendation for RF Materials is due to increased demand for pump lasers. Kim explained, "This month, RF Materials purchased land worth 10 billion won to expand its production facilities for optical modules for artificial intelligence (AI) servers," analyzing, "This suggests that production volume is planned to increase at least two to three times compared to the current level, or that the existing facilities are insufficient to achieve the targeted output."

He added, "Even looking at the industry conditions, pump laser production will inevitably increase," and continued, "Since the adoption of Co-Packaged Optics (CPO) is still in its early stages, the growth in results from Lumentum has not been fully reflected, and as Chinese companies that previously dominated the global optical module market are being pushed out of the United States, RF Materials could benefit as a result."

Demand for radio frequency (RF) is also contributing. Kim noted, "As physical AI becomes more prevalent, not only optical demand but also RF demand is rising," and further explained, "With the move from 5G standalone (SA) mode to the 6G era, where more than three times the bandwidth of 5G will be required, the parent company RFHIC is actively discussing supply with Ericsson, and with competitor NXP withdrawing from the telecommunications sector, the business environment is becoming more favorable for RF Materials not only in optics but also in RF."

This content was produced with the assistance of AI translation services.