While All Eyes Were on "Samjeonnix," a Hidden Gem Emerges... Strong Earnings and Increased Dividends from This Company [Weekend Money]

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Makers, a distributor of non-memory semiconductors, reported second quarter results for this year that significantly exceeded market expectations. This performance was driven by increased demand for FPGAs (field-programmable gate arrays), particularly in high bandwidth memory (HBM)-related semiconductor equipment and the defense sector. With projections that demand for FPGAs will expand further into the AI data center market, analysts expect Makers' strong earnings growth will continue.

According to LS Securities, Makers' consolidated sales for the second quarter of this year reached 66.8 billion won, a 1.8% increase compared to the same period last year. Operating profit grew by 39.7% to 13 billion won, while net profit attributable to controlling shareholders jumped by 83.8% to 14.1 billion won. The operating margin rose from 14.2% in the second quarter of last year to 19.5% in the second quarter of this year.

The results were well above market expectations. Makers outperformed LS Securities’ previous estimates for sales and operating profit by 15.9% and 50.2%, respectively—LS Securities had forecast 57.7 billion won in sales and 8.7 billion won in operating profit. Net profit also vastly exceeded the earlier forecast of 6.9 billion won.

Jung Hongsik, an analyst at LS Securities, explained, "Given the nature of the non-memory semiconductor distribution business, it is difficult to gauge quarterly performance, so we applied a conservative approach to our previous estimates. We are also maintaining a conservative outlook for the second half of 2026 through 2027."

The growth prospects for downstream industries that use FPGAs are also noteworthy. In Korea, high-end semiconductor equipment such as HBM testers and the defense sector represent major demand sources. Particularly, as semiconductor equipment companies producing HBM wafer testers continue to require FPGAs, there is an outlook that the supply situation may improve through next year.

Analyst Jung commented, "Among domestic downstream FPGA industries, demand for high-end semiconductor equipment and the defense sector will remain strong. Overseas, particularly in the United States, AI data centers are driving significant growth in FPGA demand, and a similar trend is expected to emerge in Korea going forward."

Performance forecasts have also been revised upward. LS Securities raised its sales forecast for this year from 238.2 billion won to 257.7 billion won and its operating profit forecast from 33.8 billion won to 37.5 billion won. The net profit forecast was also raised from 26.8 billion won to 33.5 billion won. Next year's sales and operating profit forecasts were increased by more than 10% to 285.1 billion won and 42.3 billion won, respectively.

This year, Makers’ annual sales are expected to reach 257.7 billion won, a 13.4% increase compared to last year. Operating profit is forecast to climb 28.9% to 37.5 billion won, and net profit is projected to rise by 45.3% to 33.5 billion won. Earnings per share are anticipated to increase by 69.2% year-over-year to 2,753 won.

Shareholder returns through share buybacks and increased dividends are also highlighted as key investment points. Makers is pursuing a plan to retire two million treasury shares annually from 2025 to 2027, totaling six million shares. Following the retirement of two million shares last year, the company retired an additional 2,261,000 shares in April this year. As a result, LS Securities expects the number of shares to decrease by 16.0% this year and by 16.8% next year, which will positively impact earnings per share.

Makers’ dividend per share jumped from 150 won in 2023 to 200 won in 2024, and soared to 1,200 won last year. The company pursues a shareholder return policy of distributing at least 30% of separate net income through dividends or utilizing it for the purchase and retirement of treasury shares.

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