[Edaily Reporter Shin Ha-yeon ] On the 28th, Meritz Securities projected that the growth potential of HansolTechnics(004710)’s probe card business will begin to be fully reflected in the company’s enterprise value following the integration of its subsidiary, Hansol Willtech. The analysis suggests that, combined with improved profitability in its existing businesses, there is potential for further valuation re-rating. The firm did not provide a specific investment opinion or target price.

Yang Seung-soo, an analyst at Meritz Securities, stated, “We are focusing on the potential for the company to be elevated to a key position in the probe card value chain,” adding, “We expect further revaluation of the company’s value as improvements in the core business’s profitability and the growth potential of Hansol Willtec become increasingly evident.”

The key player is Hansol Willtech, which was incorporated as a subsidiary of HansolTechnics last June. Hansol Willtech is the only domestic supplier of non-memory probe cards to have secured vertical-type technology. It primarily supplies probe cards for SamsungElectronics’ application processors (APs), image sensors (CIS), and memory controllers. The process of incorporating it as a subsidiary was completed on June 17, and it is expected to be reflected in HansolTechnics’ consolidated financial results starting in the third quarter of this year.

Meritz Securities forecasts that Hansol Willtech’s revenue for next year will increase by 78.3% year-over-year to 181.5 billion won, with operating profit rising by 142.5% to 37.2 billion won. The firm also expects the operating profit margin to rise from 15.1% this year to 20.5% next year. The firm explained that while one-time costs incurred during this year’s acquisition process will be reflected in this year’s results, those costs will disappear starting next year, and the operating leverage effect driven by revenue growth will begin in earnest.

The firm cited probe cards for CIS as a key growth driver. With domestic clients expected to begin full-scale supply of CIS to North American smartphone manufacturers starting next year, Hansol Wiltec is projected to become the exclusive supplier of probe cards for these CIS products beginning in the fourth quarter of this year.

Analyst Yang explained, “We also expect further improvements in profitability based on higher average selling prices (ASPs) compared to existing CIS and memory products, as well as the leverage effect resulting from increased volume.”

The Chinese artificial intelligence (AI) semiconductor market is another new growth driver. Hansol Willtech is expected to begin full-scale supply of probe cards for graphics processing units (GPUs) to local Chinese AI system-on-chip (SoC) customers starting in the fourth quarter of this year. Since global probe card manufacturer FormFactor withdrew from the Chinese market, the company has been developing products with numerous local AI SoC manufacturers, and it is understood that negotiations regarding mass production volumes have been finalized with some customers.

Researcher Yang noted, “Starting in the fourth quarter of this year, related revenue is expected to see structural growth linked to the expansion of local Chinese AI GPU shipments over the medium to long term,” adding, “In the high-barrier-to-entry GPU probe card market, the company’s first-mover advantage is expected to continue.”

The company is also expected to benefit from the increased shipments of in-house application processors (APs) by domestic clients. Hansol Willtech’s existing production capacity is projected to reach full operation sometime next year, opening the possibility for additional capital expenditures (CAPEX) to meet growing demand over the medium to long term. Analyst Yang assessed this as an additional factor that could drive earnings upward.

HansolTechnics’ existing businesses are also expected to contribute to improved earnings. Profitability in its core business, which is primarily low-margin, is improving based on operational efficiencies at its manufacturing subsidiaries, and Hansol Orion Tech—a company specializing in ship and robot controllers—is also expected to contribute to the improvement of the company’s overall profit capacity based on its high profitability.

Accordingly, Meritz Securities estimated HansolTechnics’ revenue for this year at 1.3813 trillion won and operating profit at 78.2 billion won. For next year, the firm forecasts revenue to rise 13.4% to 1.5664 trillion won and operating profit to increase 44.1% to 112.7 billion won. The operating profit margin is also expected to improve from 1.6% last year to 5.7% this year and 7.2% next year.

Analyst Yang noted, “Despite the recent stock price rebound, we believe the current market capitalization does not present a significant valuation burden when considering the company’s earnings strength,” adding, “Even at the current stock price, there remains a valid possibility of further valuation re-rating as the value of the probe card business resulting from the acquisition of Hansol Willtec is reflected.”