Hana Microelectronics, memory semiconductor boom, target stock price raised by 27.9%

Korea Investment & Securities upgraded Hana Micron’s target stock price to 55,000 won on the 15th, believing that its performance improvement trend will continue. This reflects the market’s view that during the memory semiconductor price increase phase, the high profitability of the Brazilian subsidiary is likely to persist.

Hana Micron achieved sales of 507.7 billion won and operating profit of 72 billion won in the first quarter of this year. These figures exceeded market expectations by 4.2% and 29.7%, respectively. As a semiconductor backend process company, Hana Micron’s performance is heavily influenced by changes in the memory industry cycle. It is noted that the profitability of its overseas manufacturing bases improved beyond expectations this quarter.

Korea Investment & Securities analyst Nam Chae-min cited the negotiated unit prices at the Vietnam Vina plant and the growth momentum of the Brazilian subsidiary as the core factors behind the strong quarterly performance. He specifically explained that through negotiations with SK Hynix at the beginning of the year, the company established a so-called cost-plus profit structure, which prices products by adding a certain profit margin on top of costs. This allows the company to reflect rising raw material costs in the supply prices. Such a structure is crucial for stabilizing the profitability of industries like semiconductors, where raw material prices fluctuate frequently.

The Brazilian subsidiary is central to this evaluation. It is believed to have achieved nearly a 20% operating profit margin, contributing to the overall improvement of the company’s profitability. Analyst Nam believes that the Brazilian subsidiary has a business structure that directly benefits from rising memory prices, so during periods of sustained memory industry prosperity, it is likely to maintain its current high profit margins. This is because, when memory prices rise, the output volume and unit prices of related backend processes tend to improve accordingly.

Based on this, Korea Investment & Securities maintains its buy recommendation for Hana Micron and has raised its target stock price from the current 43,000 won to 55,000 won, an increase of 27.9%. The market is watching whether the memory industry’s recovery is not just a simple price rebound but also capable of enhancing the performance strength of backend process companies. Whether this trend can continue may depend on the sustainability of the memory price increase momentum and how stable the company’s negotiated unit price structure with major clients remains.