[Edaily Reporter Kim Hyung-il ] Shinhan Investment Securities maintained its “Buy” rating on TLB Co., Ltd.(356860)and raised its target price to 68,000 won, a 13% increase from the previous target of 60,000 won. Amid ongoing price hikes driven by supply shortages and rising raw material costs, the firm forecasts that the company’s annual operating profit margin will reach the 20% range for the first time next year, driven by an expanded share of high-value-added products and the effects of capacity expansion.

On the 16th, Kim Ye-seong, an analyst at Shinhan Investment Securities, reported that TLB Co., Ltd.’s third-quarter revenue reached 94 billion won, a 36% increase year-over-year, while operating profit rose 92% to 16.6 billion won. The operating profit margin stood at 17.7%, exceeding the firm’s own estimates by 5% and meeting market consensus.

The improvement in earnings was attributed to the alleviation of bottleneck process pressures following the launch of the Masslam line and an expansion in the share of high-value-added products. The share of high-value-added products rose from 60% in the second quarter to 65% in the third quarter, driving an improvement in the average selling price (ASP). In particular, SOCAMM revenue reached 20 billion won, nearly doubling from the previous quarter.

The order backlog is also growing rapidly. TLB Co., Ltd.’s order backlog more than doubled each quarter, rising from 53.9 billion won in the first quarter to 131.8 billion won in the second quarter and 273.5 billion won in the third quarter. Shinhan Investment Securities analyzed that, as the supply-demand imbalance caused by supply shortages and rising raw material prices persists, order volumes are now visible through the first half of next year. The firm explained that this creates a favorable environment for further price increases.

The company is also expected to continue its upward trend in earnings for the fourth quarter. Revenue is estimated to reach 120.5 billion won, a 66% increase year-over-year, while operating profit is projected to rise 185% to 24.5 billion won. The operating profit margin is forecast at 20.3%. The effects of the price increases implemented at the end of the third quarter are expected to be fully reflected starting in the fourth quarter, and selling prices for high-value-added products such as SOCAMM are also expected to see double-digit increases.

SOCAMM sales are projected to reach 35.2 billion won, accounting for 29% of total revenue and driving profitability improvements. Next year, the company is expected to achieve an operating profit margin in the 20% range for the first time on an annual basis, driven by a combination of additional price hikes, the effects of the fourth-quarter capacity expansion, and the expansion of the BVH construction method.

The target price was calculated by applying a target price-to-earnings ratio (PER) of 17 times to next year’s estimated earnings per share (EPS) of 3,990 won. Analyst Kim stated, “Although the valuation multiples of global peers have fallen by 17%, we raised the target price to reflect the 35% upward revision to TLB Co., Ltd.’s EPS estimate,” adding, “The projected PER for next year is 10.9x, which is lower than the 2020–2021 average of 17.4x, highlighting the stock’s attractive valuation.”