Daishin Securities on the 25th lowered its target price for Hana Materials (KOSDAQ: 166090) from 106,000 won to 90,000 won, while maintaining a Buy recommendation. Based on the closing price of 50,900 won on 24th August, the brokerage sees upside potential of 76.8%.
Ryu Hyeong-geun, an analyst at Daishin Securities, argued that "market concerns over the silicon anode materials venture are excessive" and that "the current share price undervalues the growth prospects of the semiconductor business." The target price cut reflects an adjustment to the valuation gap, with the applied target price-to-earnings (P/E) multiple reduced from 22 times to 18 times.
Hana Materials' share price has fallen 37.2% over the past three months, underperforming the KOSDAQ index by 10.4 percentage points over the same period. The primary catalyst for the decline was investor unease following the company's announcement of a new silicon anode materials business. On 12th August, Hana Materials disclosed plans to invest 70.2bn won to build a mass-production manufacturing line for silicon anode materials by June 2027.
Daishin Securities pushed back against the notion that this represents overreach. The brokerage noted that silicon — the key raw material — can be sourced internally as a by-product of the company's semiconductor operations, keeping input costs in check. The firm also estimated that sample tests with key customers have been completed successfully, and suggested that visibility over end-market applications — including electric vehicles and robotics — has improved. Commercial revenues from silicon anode materials are expected to begin in earnest from 2028.
The lukewarm initial reaction to the new venture partly reflects a broader wariness in the market shaped by the travails of South Korea's battery materials sector. Companies such as EcoPro BM and POSCO Future M have struggled with weakening demand and inventory overhangs, creating a climate in which any new foray into battery-related businesses tends to be viewed with scepticism. That sentiment may have fed disproportionately into Hana Materials' share price decline.
The earnings outlook for the core semiconductor components business, however, remains robust. Daishin Securities forecasts operating profit of 104.5bn won in 2026 (operating margin: 27%) and 138.7bn won in 2027 (operating margin: 28.6%), representing 9% and 13% premiums to market consensus respectively. Revenue is projected to grow from 273.5bn won in 2025 to 386.3bn won in 2026 and 484.8bn won in 2027.
The engine of this profit growth is a tightening in semiconductor supply. As major customers — Samsung Electronics and SK Hynix among them — raise capital expenditure and utilisation rates, suppliers of genuine OEM components stand to benefit significantly. Diversification across both customers and products is also expected to improve the quality of earnings. Hana Materials has steadily broadened its customer base to include global semiconductor equipment makers such as Tokyo Electron (in which it holds a 13.78% stake), Lam Research, and Applied Materials, lending greater stability to its revenue base.
On valuation, the current share price looks unusually cheap. On Daishin Securities' estimates, the stock trades at just 9.8 times 2027 earnings — well below the average 12-month forward P/E of 12 to 20 times seen between 2023 and 2026, and close to a historical trough. Peers in the semiconductor front-end components space, including TCK, Wonik QnC, and Waldex, trade at 12-month forward P/E multiples of roughly 10 to 20 times, implying a sizeable discount for Hana Materials.
Investors should nonetheless weigh several risks. The 70.2bn won capital commitment will increase near-term spending pressure: investing cash outflows are expected to widen sharply in 2026 (to an estimated -233bn won), and net debt may rise in the short term. The silicon anode materials market remains at an early stage, and the timing of any recovery in electric vehicle demand is uncertain. It is also worth noting that the reported success of sample tests is Daishin Securities' own estimate rather than a fact confirmed by the company. As with any single brokerage's bullish analysis, it may not reflect the broader market consensus, and investors should weigh it accordingly.