"HPSP, Orders Expected to Increase... Target Price Raised 15%" [Click e-Stock]

Samsung Securities Maintains Its "Buy" Rating

Samsung Securities said on October 19 that it had raised its target price for HPSP, a semiconductor equipment specialist, by 15.4%, from 65,000 won to 75,000 won. It maintained its “Buy” rating. The new target price implies 38.6% upside from the current share price of 54,100 won.

Moon Jun-ho, a researcher at Samsung Securities, forecast that HPSP’s third-quarter results would meet market expectations. Revenue is expected to come in at 49.3 billion won and operating profit at 25 billion won, for an operating margin of 50.8%, broadly in line with the average analyst estimate, or consensus. This would represent year-over-year increases of 53.9% in revenue and 65.7% in operating profit.

“Domestic sales have started to rise again along with NAND revenue, but with exports accounting for around 70% of sales, the company cannot avoid the impact of exchange rates,” Moon noted. Revenue recognition for a North American foundry customer is also being delayed. However, he expects any additional risks beyond these to be limited.

Samsung Securities raised its earnings estimates for this year and next to reflect an increase in orders. It forecast that operating profit would rise 60.0% to 143.9 billion won this year and 62.5% to 233.7 billion won next year. Its operating profit estimate for next year was raised 8.3% from the previous forecast, while its estimate for next year’s earnings per share (EPS) increased 7.9%, from 2,160 won to 2,331 won.

Revenue from NAND is set to increase significantly as previously indicated. The favorable memory market is also expected to continue, with existing DRAM customers raising their capital expenditure (CAPEX) plans for fiscal 2027 in recent earnings announcements. Meanwhile, capacity expansions for leading-edge processes are accelerating in non-memory, or system semiconductor, markets, a traditional source of demand.

Moon also sees further growth potential in DRAM. He estimates that adding just one more customer for the 1d DRAM process could generate more than 70 billion won in additional annual revenue. That would equal about 17% of the revenue estimate for next year, and he expects whether HPSP can secure another customer to become clearer as early as the first half of next year.

“HPSP is now expected to benefit not only from capacity expansions by existing customers, but also to expand into new customers and applications as processes change,” Moon said. “Even if it shares the same industry tailwinds, the company deserves a premium for its above-market growth.”

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