“RF Materials’ growth accelerates ... target price raised to KRW 65,000”

[Financial News] Korea Investment & Securities maintained its “Buy” rating on RF Materials, forecasting that growth will accelerate on rising demand for pump-laser packages and expanded production capacity. It raised its target price by 7% to KRW 65,000.
Kim Jeong-chan, an analyst at Korea Investment & Securities, said on the 26th, “Third-quarter operating profit is expected to exceed market expectations. Growth in pump-laser packages for Lumentum is expected to continue this quarter, with higher production volumes and prices, while the impact of the falling exchange rate remains limited.”
Korea Investment & Securities forecast that RF Materials’ third- and fourth-quarter revenue would rise 80.2% year on year to KRW 26.3 billion, while operating profit would increase 223.8% to KRW 6.1 billion.
He cited higher shipments by Lumentum, a major customer, as a key growth driver. “Lumentum has a 70–80% share of the pump-laser market and has indicated that its shipments will quadruple within the next several quarters,” he said, adding that “RF Materials’ position as a supplier to Lumentum will also be strengthened.”
Analyst Kim said, “The company has barriers to entry in the form of its brazing technology for joining ceramics and metals at high temperatures, its know-how in designing assembly jigs, and Korea’s only high-temperature co-fired ceramic (HTCC) technology. Its lead time is also shorter, at 4–6 weeks, compared with 12–16 weeks for Japanese competitors.”
He explained, “The company plans to switch to a two-shift system to meet demand in 2027, and production is expected to increase to at least 1.5 times this year’s level. When the new factory is completed in the fourth quarter of next year, production capacity on a standalone basis is expected to expand to about KRW 200 billion.”
He added, “The CW laser package used in CPO ELS will enter full-scale mass production starting in January next year. With the added benefit of CPO growth following that of pump lasers, the medium- to long-term growth outlook is highly visible.”
[email protected] Joo Won-gyu Reporter