ISU Petasys Set to Move Beyond Raw-Material Concerns... High-Value Substrates to Drive Growth

[Financial News] ISU Petasys is expected to accelerate its growth from the fourth quarter despite concerns over raw-material supply.
On the 22nd, Meritz Securities highlighted the expansion of mass production for high-value substrates used in next-generation artificial intelligence (AI) semiconductors and network equipment. The brokerage maintained its "Buy" rating and target price of KRW 160,000.
Yang Seungsoo, a researcher at Meritz Securities, said, "Mass production of substrates for major customers' next-generation AI semiconductor, 'TPUv8X,' and 1.6T switches is expected to begin in earnest from the fourth quarter," adding, "Growth should accelerate as the number of AI semiconductor customers also increases."
Yang identified 'MultiLam,' a multilayer substrate, as the key product expected to drive earnings. He said, "The share of MultiLam, whose average selling price (ASP) is more than twice that of existing products, is expected to continue increasing," adding, "The share of revenue from MultiLam, currently in the low teens, is expected to rise to about 70% by the end of 2027."
Accordingly, Yang forecast ISU Petasys's 2027 operating profit at KRW 563 billion. That is 6.6% higher than the market estimate of KRW 528.1 billion. He estimated operating profit for the third quarter of this year at KRW 96.5 billion, up 65.2% from the same period last year. The effects of factory expansion are beginning to emerge, while higher raw-material costs are being passed on to customers more smoothly than expected.
Regarding recently raised concerns about disruptions in raw-material procurement, Yang said the company appears to have secured three to four months' worth of inventory in advance in cooperation with major customers. He also noted that, in connection with HDI, a next-generation substrate manufacturing technology, the company is already supplying products to new customers and building up production experience.

[email protected] Choi Do-sun Reporter