Daishin Securities raises target price for HPSP on broad-based order momentum

Daishin Securities raised its six-month target price for HPSP (KOSDAQ: 403870) from ₩63,000 to ₩71,000 on September 28th, while maintaining a Buy recommendation. Based on the closing price of ₩55,500 on September 23rd, the implied upside to the new target is 27.9%.

The upgrade is underpinned by a broadening order book spanning NAND flash, DRAM and logic/foundry applications. Daishin argues that rising capital expenditure across the semiconductor industry, combined with an expanding customer base, creates conditions for differentiated earnings growth over the next two years.

Three years of stagnation, then a sharp inflection

The projected numbers are striking precisely because of what preceded them. HPSP recorded revenue of ₩179bn and operating profit of ₩95bn in 2023, figures that barely moved the following year (₩181bn and ₩94bn respectively) and are expected to dip slightly again in 2025 to ₩173bn and ₩90bn. A combination of a sluggish semiconductor cycle and weak NAND investment kept the company in effective stasis for three years.

The outlook from 2026 onwards looks markedly different. Daishin forecasts revenue rising to ₩256.4bn in 2026 and ₩404.9bn in 2027, with operating profit reaching ₩142.2bn and ₩232.8bn over the same period. Operating margins are projected to expand from 52% in 2025 to 58% by 2027. The 2026 operating profit estimate was itself revised up by 8.6% from the previous forecast of ₩131bn.

NAND: the growth engine

The most powerful driver is NAND flash. Daishin expects shipments of HPSP's high-pressure annealing equipment into the NAND segment to rise 70% year on year in 2027. As 3D NAND stacking advances beyond 300 layers, the process benefits of high-pressure annealing become more compelling, and Daishin believes virtually every NAND manufacturer has now committed to adopting the technology. By 2027, HPSP is expected to be supplying five customers in this segment. Further upside could come from growing penetration of hybrid copper bonding (HCB), a next-generation wafer-to-wafer bonding process that broadens the application scope for the equipment.

DRAM: customer count set to rise

In DRAM, customer diversification is expected to become visible from 2027. HPSP currently supplies an estimated two customers, but the three major DRAM producers — Samsung, SK Hynix and Micron — are all targeting completion of their next-generation "1d" node development by year-end. If that milestone is reached, a third customer could be added, with two of the three expected to adopt high-pressure annealing in their 1d processes. All three are understood to be planning 1d production lines at new fabs targeting completion in 2027.

Logic and foundry: a secondary tailwind

Revenue from logic chip and foundry customers is also expected to recover. Sustained capital expenditure expansion at Intel and TSMC, alongside growing CPU shortages driven by the spread of agentic AI applications, could generate additional orders.

Risks: the monopoly question

The principal risk is competitive entry. HPSP currently holds a near-monopoly position in high-pressure annealing equipment, but the market has long speculated about potential challengers. Should a competitor enter, both market share and average selling prices could face pressure. Daishin estimates that even if new entrants emerge, the impact on HPSP's market share would remain below 10% through 2028 — though investors should treat this as one broker's view rather than a given. The actual effect would depend heavily on the timing and technical capability of any new entrant.

Valuation and financial health

The ₩71,000 target is derived by applying a target price-to-earnings ratio of 34 times to a blended EPS of ₩2,086, weighted 25% on the 2026 estimate and 75% on 2027. The 34x multiple represents the company's historical 12-month forward average PER plus one standard deviation — a meaningful growth premium. At the current share price of ₩55,500, the implied 2027 forward PER stands at 24.1 times, which Daishin considers undervalued.

HPSP's balance sheet is exceptionally clean. The company carries virtually no debt, and net cash is forecast to reach ₩444.5bn by end-2027. Operating cash flow is projected at ₩216bn that year. That financial firepower leaves room for inorganic growth, including potential acquisitions.

A transitional year before the breakout

For now, 2025 remains a transitional year. Revenue and profit are expected to slip modestly from 2024 levels, meaning the anticipated recovery has yet to show up in reported figures. The share price has already climbed 23.6% over the past month and is nearly double its 52-week low of ₩28,150. For investors, the key discipline will be verifying each quarter whether the projected earnings inflection is genuinely materialising — rather than simply taking the forecasts on faith.