[Click e-Stock] "Daeduck Electronics Expected to Beat Q2 Estimates... Target Price Raised"

Meritz Securities Raises Daeduck Electronics Target Price to 200,000 Won

On June 17, Meritz Securities forecasted that Daeduck Electronics’ second-quarter earnings would surpass market expectations, raising its target price from 1.9 million won to 2 million won and maintaining its "Buy" investment rating.

Meritz Securities estimated Daeduck Electronics’ second-quarter results at 381.8 billion won in revenue (up 55.1% year-on-year) and 62 billion won in operating profit (up 3,224.6%). These figures exceed the market consensus for revenue (370 billion won) and operating profit (58.7 billion won) by 3.2% and 5.7%, respectively.

Seungsoo Yang, a researcher at Meritz Securities, explained, "The increase in average selling price (ASP) reflecting the rise in raw material costs across the entire product lineup—including memory package substrates, flip chip ball grid array (FC-BGA), flip chip chip scale package (FC-CSP), and multilayer board (MLB)—has now been fully reflected." He added, "In particular, the effect of passing on price increases has become visible not only for new products but also for existing ones, resulting in a noticeable ASP increase across the board." He continued, "With demand recovery at the front end, FC-BGA utilization rates are now close to 80%."

Daeduck Electronics is expected to continue its strong performance into next year. Last month, companies related to memory package substrates and FC-CSP announced an investment of 213 billion won and plan to commence construction of a new eight-story production facility. Meritz Securities predicted that, once all equipment is installed in this facility, production capacity will expand by approximately 80% compared to the existing plant. Yang said, "Current FC-CSP production capacity is estimated at about 900 billion won, and the new facility is expected to begin operations from the third quarter of next year."

For FC-BGA, an investment of 90 billion won that had been put on hold has resumed, and pre-orders for key production equipment with long lead times are being placed. Additional investments are also reportedly planned.

Regarding MLB, sales for the aerospace sector continue to grow. Meritz Securities projected that from the fourth quarter, sales to new aerospace customers as well as existing ones would expand. Furthermore, starting in the second half of the year, the delivery of compute boards for major AI customers will begin, and the company expects an improvement in ASP and profitability owing to a better AI-focused product mix.

Yang stated, "From this month, Daeduck Electronics has started mass production of large-area FC-BGA products, and from the second half of the year, mass production of large-area, high-layer AI network FC-BGA products will begin in earnest. Existing business divisions such as memory package substrates and MLB are also entering a structural inflection point based on expansion and high-value-added demand, so we believe it is reasonable to apply a premium multiple to the company."

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