Analysts Upgrade HANA’s Target Price to Bt68 amid Higher Demand-Positive Momentum in 2021

After the share price of Hana Microelectronics Public Company Limited (HANA) has been making a new high continuously, many analysts have revised up their target price for HANA as high as ฿68.00/share.

 

KTB Securities (Thailand) (KTBST) revised its recommendation from “Hold” to “Buy” with an upgraded target price from ฿52.00/share to ฿68.00/share, expecting the company to pave the way for rapid growth next 3 years on 5G breakthrough.

 

KTBST re-rated 2021E PER multiples to 25x (+4 SD above its 6-yr average) from 22x (+3 SD). At an analyst meeting yesterday (March 16), the security company had an increasingly positive outlook about HANAs earnings outlook following the company’s bullish guidance.

Firstly, HANA is confident that semiconductor demand will grow across all industries (auto, PCs and smartphones) over the next two years, at least. Second, the company expects to increase its selling price in the wake of chip shortage. Third, HANA aims to increase its production capacity by 10%. Four, its Chinese plant has experienced a strong improvement in the aftermath of the Trump-era trade dispute in 2019. Last, the company has a plan to build a plant in the US to accommodate a growing demand for smart barcode with RFID tag, which has been increasingly adopted by consumer products and thus provides a high profit margin.

KTBST raised 2021-22E net profit forecast by 15-21% to Bt2.19bn (+15% YoY)/Bt2.55bn (+12% YoY), as the security company revised up our revenue forecast by 20-35%, respectively.

HANAs share price outperformed the SET Index by 30-84% in three and 12 months following its strong earnings performance. KTBST expected the stock to remain an outperformer on the back of 1) its strong growth outlook, which KTBST forecasted EPS to grow 14% CAGR in 2020-22E; 2) an upside to its revenue forecast on a potential increase in selling prices (chip shortage) and production expansion; and 3) its laggard given a strong growth potential in the US tech industry over the next three years on the back of 5G era breakthrough. HANA thus deserves to trade at a premium valuation.

 

Maybank Kim Eng upgraded HANA’s target price from ฿55.00/share to ฿68.00/share, expecting the company to maintain positive momentum throughout the year due to strong demand in downstream business including IT, Telecom and Automobile to a double digit growth along with the recovering in the global economy. HANA planned to increase its production capacity this year with the business lineup to push its net profit in 2021 by 16%.

 

Finansia Syrus Securities (FSS) gave a “BUY” recommendation on HANA with a target price at ฿63.00/share on strong demand that led to an increase in production capacity. The company would not receive an impact on the shortage of chip supply, while the higher copper price would have a limited impact on HANA due to not being the main component. Maybank upgraded the net profit forecast of HANA in 2021 to 26%.