Analysts Cut ‘HANA’ Target Price as Weak Demand Weighs on Earnings

Analysts are cutting target price of Hana Microelectronics Public Company Limited (SET: HANA) as its share prices dropped THB1.75 or 3.87% to close the morning session on Friday, November 17 at THB43.50 per share, its lowest level in four months.

DBS Vickers downgraded HANA to “HOLD” and cut target price to THB49.00 per share, stating that surging profit was due to FX gain while actual sales dropped. DBSVS expected weak demand in 4Q23, especially for the IC assembly business, which makes up of its revenue.

CLSA Securities maintained “BUY” recommendation, but cut target price from THB86.00 ro THB66.00 per share, cutting 2023-25 earnings forecast by 2-17% as recovery in semiconductor sales pushed back to 2H24 due to weak demand in China.

Citi maintained “BUY” on HANA, but cut target price from THB65.50 to THB51.50 per share, mainly on derated valuation, seeing near-term pressure on slower-than-expected demand recovery.

Still, Citi remained positive on medium-term upcycle in addition to recent corrected share price. It is now trading at 5x 24E P/E or its -0.75SD. HANA also traded at a 22% discount to regional peers and with moderate growth in 2024E, thus it is attractive in Citi’s view.

Citi cut 2023 earnings by 1% from its earlier forecast, and 3-11% for 2024-25 due to 1) weaker THB than expectation and 2) lower revenue growth of both IC packaging, PCBA and PMS. 2023-25 earnings growth is expected to grow 10% p.a., down 5 percentage points from earlier forecast.