From 59,000 Won to 114,000 Won in a Month... Institutions Buy 245.6 Billion of This Stock [This Week’s Stock to Watch]

Hit Year’s Low in July, Then Rebounded as Institutions Bought In
Record-High Quarterly Results and Robust Order Backlog
Product Pricing, Production Capacity Expansion, and Focus on High-Value Products as Tailwinds

Isu Group-affiliated semiconductor printed circuit board (PCB) manufacturer Isu Petasys has posted its highest-ever quarterly performance, leading to a surge in its stock price. With steady demand from big tech, as well as positive developments in production capacity, product diversification, and product pricing, many expect Isu Petasys to continue its growth trajectory.

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Isu Petasys Stock Rises on Institutional Buying

Since the beginning of this year, Isu Petasys shares have fluctuated between 100,000 won and 120,000 won, but reached a record high of 161,400 won at closing on April 22. This surpassed the previous peak of 148,200 won on December 11 last year. However, the price dropped, reaching this year’s lowest closing price of 59,200 won on July 30. The stock then rebounded, returning to the 100,000 won range after the second quarter earnings announcement on August 14. As of August 31, it was trading at 114,000 won, entering a period of short-term consolidation. The driving force behind this rise was institutional investors. Between July 31 and August 31, institutions net-purchased 245.59 billion won worth of Isu Petasys shares, with investment trusts leading the charge by buying 106.545 billion won. 'Investment trusts' refers to asset management firms that invest pooled funds on behalf of individual investors.

What Are Multilayer Boards, Isu Petasys's Focus?

Established in 1972, Isu Petasys has produced PCB-related products and recently began manufacturing high-layer PCBs, or multilayer boards (MLB). The company was listed on the KOSDAQ market in 2000, and most of its production is carried out at its Daegu plant in Korea. The MLBs produced by Isu Petasys are used in various industries including networking, servers, and telecommunications equipment. As demand for AI-powered computing increases, the need for high-performance boards is rising. To meet this demand, Isu Petasys is expanding its fifth plant dedicated to multilayer product manufacturing.

An MLB board is essentially a PCB made by stacking several layers. As a fundamental semiconductor component, PCBs are created by removing everything except the circuit lines from a copper plate, resulting in a substrate that acts as the circuit. Electricity flows along these lines, enabling semiconductors to perform specific functions. When creating circuits, lines cannot cross over one another on a single layer, as crossing would cause currents to flow incorrectly and the semiconductor to malfunction. To address this, complex circuits are designed by transferring lines to different layers. Such multi-layered PCBs are known as MLBs. The more complex the tasks a semiconductor must perform, the more layers the board requires.

Record-High Quarterly Earnings and Ample Order Backlog

Institutions began actively purchasing Isu Petasys shares starting from August 14, after the company announced its record-high quarterly earnings. In the second quarter, Isu Petasys reported revenue of 379.9 billion won and operating profit of 77.1 billion won, resulting in an operating margin of 20.3%. Specifically, the proportion of low value-added server sales decreased from 14% in the first quarter to 9% in the second quarter. The product line shifted to focus on high value-added items like AI accelerators and switches, resulting in increased revenue and operating profit. Sunyoung Ko, a researcher at Yuanta Securities, said, "This is the result of structural demand from increased investment in ASIC (AI application-specific integrated circuits) and network equipment, combined with expansions in production capacity."

Ample order backlogs are also a positive factor. In the second quarter, Isu Petasys’s order backlog reached 622.2 billion won, up 97% from the same period last year. The share of multilayer products rose from 11% in Q1 to 23% in Q2. Notably, in addition to key clients like Nvidia and Google, new big tech companies have joined as customers—market speculation includes Amazon Web Services (AWS). Min-Kyu Kwon, a researcher at Kiwoom Securities, emphasized, "The order backlog is expected to be recognized as revenue in the third quarter and will likely drive further growth in average selling prices (ASP) and overall sales."

Product Pricing, Capacity Expansion, and Product Focus Provide Tailwinds... Yield Risks Remain

Isu Petasys is benefiting from a combination of price hikes due to AI board supply shortages, capacity expansions, and a product focus on high value-added items, suggesting continued improvement in earnings. Regarding pricing, negotiations with clients began last month and are expected to conclude in October, with average price increases of around 15% under discussion. These price changes will be fully implemented starting in the fourth quarter and may be renegotiated if raw material prices rise further. Isu Petasys's production capacity, which supports revenue growth, will increase sequentially from a monthly volume of 120 billion won in Q2 of this year to 150 billion won in Q1 and 180 billion won in Q2 of the following year. In addition, investment in the seventh plant, dedicated to HDI (high-density interconnect) multilayer boards, is under consideration, suggesting substantial expansion effects can be expected for at least the next three years on a semi-annual basis. The share of high value-added multilayer boards (multi-RAM, HDI) in total sales grew from 7% in Q1 to 11% in Q2, and because the ASP is two to three times higher than VIPPO, this is expected to enhance margins. Seungsoo Yang, a researcher at Meritz Securities, said, "From the second half of this year, quantitative growth from capacity expansion will coincide with qualitative improvements from a mix focused on multi-RAM, yield stabilization, and price increases."

However, limited capacity compared to Chinese competitors remains a weakness. At an investor relations event last month, Isu Petasys acknowledged, "It is true that our (capital expenditure) is smaller than that of competitors in Taiwan or China," but added, "While competitors are investing in a wide array of PCB sectors, Isu Petasys is targeting investments specifically in high-layer network and HDI markets." There are also yield risks. For multilayer products, all process steps—stacking, drilling, plating, and outer-layer patterning—increase two to three times compared to existing MLB processes. Even small defects can affect yield and temporarily constrain margins. Jihyun Hwang, a researcher at NH Investment & Securities, said, "Delays in yield improvements for multilayer technology and delays in new product quality testing could pose downside risks."

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