Hana Materials is projected to achieve strong Q2 2024 earnings, according to Shinhan Investment & Securities. The South Korean semiconductor etching component manufacturer received a 43% target price upgrade to 83,000 won, with Q2 operating profit forecast at 23.4 billion won, representing 176% year-over-year growth. The upgraded outlook reflects rising demand for etching components driven by recovery in the memory semiconductor sector, particularly NAND flash and DRAM markets.
Hana Materials Records 144% Operating Profit Growth in Q1 2024
Hana Materials delivered Q1 2024 revenue of 93.4 billion won, a 59% increase year-over-year, and operating profit of 21.3 billion won, a 144% increase year-over-year. Shinhan Investment & Securities maintained its 'Buy' investment opinion alongside the target price adjustment.
Oh Kang-ho, analyst at Shinhan Investment & Securities, stated that Hana Materials demonstrated high growth in Q1 due to increased demand for core components following semiconductor industry improvement. The analyst noted the company entered a phase of stepwise growth where profitability improves alongside revenue expansion, describing this year as the first year of earnings growth.
Capacity Utilization Climbs from 56% to 80% Across Three Quarters
The key driver behind earnings improvement is increased demand for major etching components and rising factory capacity utilization, according to Shinhan Investment & Securities. Capacity utilization rates for Hana Materials' silicon component (Dart) business rose from 56% in Q1 2023 to 68% in Q3 2023, reaching 80% in Q1 2024.
Shinhan Investment & Securities projects capacity utilization will reach 85-90% in the second half of 2024, considering industry improvement. The brokerage assessed that expectations for additional capacity expansion are sufficient given product upgrades and demand increases.
Shinhan Investment & Securities Raises Full-Year Profit Forecast 88.5%
Shinhan Investment & Securities revised its annual earnings estimates upward, forecasting Hana Materials' full-year 2024 revenue at 377.3 billion won, a 38% increase year-over-year, and operating profit at 94.4 billion won, an 88.5% increase year-over-year.
Operating margin rose from 18.3% in 2023 to 22.8% in Q1 2024, with full-year 2024 margin estimated at 25% and 2025 margin projected at 27.3%.
Oh Kang-ho stated that semiconductor industry improvement directly translates to increased demand for Hana Materials' core products, including silicon components and silicon carbide (SiC) rings. The analyst noted that operating leverage effects from revenue expansion are materializing, significantly improving profitability.
FAQ
What did Shinhan Investment & Securities forecast for Hana Materials' Q2 2024 earnings?
Shinhan Investment & Securities forecasts Hana Materials will achieve Q2 2024 revenue of 93 billion won and operating profit of 23.4 billion won, representing 176% year-over-year growth in operating profit.
Why did Hana Materials' operating margin improve in Q1 2024?
Hana Materials' operating margin rose from 18.3% in 2023 to 22.8% in Q1 2024 due to increased demand for semiconductor etching components driven by memory chip industry recovery, combined with rising factory capacity utilization rates that reached 80% in Q1 2024.
