[Edaily Reporter PARK MIN ] On the 26th, NH INVESTMENT & SECURITIES stated regarding SIMMTECH Co., Ltd.(222800), “Demand for printed circuit boards, including SOCAMM (a low-power memory module), is expanding faster than expected, leading to a shift away from the previously conservative capital expenditure (CAPEX) stance,” and "With an investment of 274.2 billion won, the company will secure additional capacity to produce approximately 450 billion won worth of products annually, leading to expectations of high investment efficiency and medium- to long-term profit growth." The firm also maintained its “Buy” rating and target price of 170,000 won.

Hwang Ji-hyun, an analyst at NH INVESTMENT & SECURITIES, stated in a report published today, “We believe the company has shifted its investment strategy as demand for printed circuit boards, centered on SOCAMM, is growing faster than expected,” adding, “Earnings expectations for 2028, when the new capacity comes online in full, have risen significantly.”

SoCam is a low-power memory module used in AI servers; it is a component designed to process data quickly while reducing power consumption compared to existing memory. As AI servers process increasingly large amounts of data, SoCam is gaining attention as next-generation memory capable of improving power efficiency.

SIMMTECH Co., Ltd. announced a new capital expenditure plan the previous day. The company plans to invest a total of 274.2 billion won in its Cheongju headquarters by the end of 2027. The investment amount represents 47.6% of the company’s equity as of the end of last year. The investment period runs from August 25 of this year through December 31, 2027.

This investment is intended to expand production capacity for SOCAMM module substrates for AI and high-layer-count MSAP substrates. Approximately 50% of the investment will be allocated to expanding SOCAMM module PCB production capacity, 40% to high-layer-count MSAP substrates, and the remaining 10% to system IC substrate production capacity.

The new production capacity is scheduled to come online in full starting in 2028. NH INVESTMENT & SECURITIES estimates that this expansion will increase annual sales capacity by approximately 450 billion won. Given that the additional sales capacity significantly exceeds the investment amount of 274.2 billion won, the firm forecasts that investment efficiency will rise as production line utilization rates increase.

In particular, analysts note that this expansion is significant because it marks a shift in SIMMTECH Co., Ltd.’s existing investment strategy. SIMMTECH Co., Ltd. had originally planned to execute only maintenance-level investments this year, but decided to proceed with additional expansion as demand for PCBs—particularly for SOCAMM—grew faster than expected.

The source of investment funds has not yet been finalized. SIMMTECH Co., Ltd. is considering both internal retained earnings and external financing, but has ruled out a paid-in capital increase.

Analyst Hwang emphasized, “The source of funding has not yet been finalized, and it appears the company is reviewing both internal retained earnings and external financing (excluding a rights offering).” He added, “Although the specific financing method has not yet been determined, the profit increase resulting from the new capacity is expected to be at least 15% higher than previous estimates; therefore, a significant improvement in earnings is anticipated relative to the investment burden.”

NH INVESTMENT & SECURITIES projected SIMMTECH Co., Ltd.’s revenue for this year at 2.096 trillion won and operating profit at 247 billion won. Compared to last year, this represents a 48.6% increase in revenue and a 1,979.9% increase in operating profit. The firm also expects the operating profit margin to improve significantly, rising from 0.8% last year to 11.8% this year.

The firm also predicted that the upward trend in earnings would continue next year. For 2027, revenue is expected to reach 2.515 trillion won and operating profit 412 billion won, representing increases of 20.0% and 67.1%, respectively. The operating profit margin is estimated to rise to 16.4%. In 2028, revenue is projected to reach 3.117 trillion won and operating profit 610 billion won, with the operating profit margin rising to 19.6%.