Kiwoom Securities reaffirmed its Buy rating and target price of 190,000 won on Isu Petasys (KOSPI: 007660) on the 19th, implying upside of roughly 85% from the closing price of 102,900 won on the 18th.
Record quarterly results
Isu Petasys reported second-quarter (April–June) revenue of 379.9bn won and operating profit of 77.1bn won, up 57% and 83% year-on-year respectively. The operating margin came in at 20.3%, beating the market consensus estimate of 75.1bn won and marking a new quarterly high.
The principal driver of the strong performance was the commencement of mass production of multi-layer build-up substrates. The average selling price (ASP) rose sharply to 5.206m won per square metre in the second quarter, a 14.3% jump from 4.557m won in the first quarter. Substrates manufactured using multi-RAM and HDI (high-density interconnect) processes command prices two to three times higher than conventional VIPPO-process boards. The share of multi-layer products in the order backlog expanded from 11% in the first quarter to 23% in the second.
The order backlog stood at 622.2bn won at the end of June, up 97% year-on-year and 8% from the prior quarter. Since this backlog is expected to feed into third-quarter results, further ASP appreciation and revenue growth look likely.
Two highlights from the earnings release
Two announcements from the results call stand out. First, Isu Petasys has decided to expand its sixth factory and has raised its monthly revenue guidance—effective from the first quarter of 2027—from 140bn won to 155bn won. Second, the company has secured two new hyperscaler customers. The first (identified only as Customer A) began receiving HDI-process substrates in the first half of this year; revenue from this relationship is forecast to grow at a compound annual rate of 56% between 2024 and 2029. The second (Customer B) will start receiving multi-RAM switch substrates from the fourth quarter of this year.
Price increases are also under way. The company has concluded negotiations with several clients on average increases of around 15%, with talks continuing with the remainder. These rises are expected to offset higher raw-material costs and currency headwinds, supporting margin improvement in the second half. The company also confirmed that it is evaluating a seventh factory dedicated solely to HDI production.
Valuation and de-rating factors
Kiwoom Securities notes that Isu Petasys has been conspicuously left behind during this year's AI-driven market rally, posting the weakest share-price gain among Korean substrate makers. The stock has fallen roughly 36% from its peak of 161,400 won. Analysts attribute the de-rating to a combination of factors: limited room to raise capacity guidance further once utilisation peaks, concerns about losing market share at its largest customer, doubts about its HDI technical capabilities, and aggressive capacity additions by rivals.
Risks worth heeding
Investors should not take the brokerage's optimism at face value without considering several risks. On a consolidated basis, Isu Petasys's single largest customer accounts for 40–50% of revenue—a concentration that the research note itself acknowledges as a de-rating factor. Two new customers will take considerable time to diversify this exposure meaningfully. Furthermore, multi-layer build-up substrates are an area where competitors are also expanding aggressively, and it remains uncertain how long the current ASP premium can be sustained.
On valuation, Isu Petasys trades at 26.5 times forecast 2026 earnings, broadly in line with domestic peer Daeduck Electronics (26.6 times) and slightly above TTM Electronics (25.8 times). That said, its operating margin and return on equity rank among the best in its peer group, which lends some justification to a premium.
Earnings forecasts
Kiwoom Securities projects 2026 annual revenue of 1.6484tn won (up 52% year-on-year) and operating profit of 361.8bn won (up 77%). For 2027, it forecasts revenue of 2.399tn won and operating profit of 582.9bn won.