Daeduck Electronics (353200.KS), a printed circuit board (PCB) maker, is accelerating its capacity expansion, announcing its second large-scale facility investment plan this year.
According to electronic disclosures filed with the Financial Supervisory Service (FSS) on the 21st, Daeduck Electronics will invest 497 billion won in semiconductor production facilities by 2027. Combined with the 213 billion won investment announced in May, the total investment announced this year alone reaches 710 billion won. "We plan to invest broadly in substrates for semiconductor packaging," a company official said.
The investment aims to respond to surging semiconductor demand. Daeduck Electronics produces high-value substrates including flip-chip chip scale packages (FC-CSP), used in mobile devices, and flip-chip ball grid arrays (FC-BGA), used in high-performance semiconductor chips.
"We decided on the new investment expecting supply to fall far short, as the semiconductor market is doing so well that it has moved beyond a mere recovery," a Daeduck Electronics official said. "We see high-value substrates such as FC-CSP and FC-BGA as growth drivers."
The investment funds will be raised through cash holdings and external borrowing. As of the end of the first quarter, Daeduck Electronics held 215.8 billion won in cash (including short-term financial instruments) on a consolidated basis, about one-third of the investment amount. The company has maintained virtually debt-free management with only 9.5 billion won in borrowings, but is now considering external borrowing in light of this investment.
However, the impact on financial soundness is limited. As of the end of the first quarter, total equity and total liabilities on a consolidated basis stood at 918.7 billion won and 276.5 billion won, respectively, putting the debt ratio at around 30%. That is far below the 100% considered appropriate for manufacturers. Even assuming the entire investment amount were borrowed at once, the debt ratio would be 107%, staying within an acceptable range.
"Since our stance of minimizing borrowings remains the same, we plan to fund the investment on our own and borrow only the shortfall," a Daeduck Electronics official said. "We are considering financing amid the large-scale investment trend among big tech firms, and we are keeping the possibility of external borrowing open."
Profitability is also expanding. First-quarter revenue on a consolidated basis was 346.3 billion won, up about 60% from a year earlier. Operating profit and net profit came in at 51.3 billion won and 45.5 billion won, respectively, both swinging to a profit over the same period. Market estimates for the second quarter are 367.1 billion won in revenue and 59.3 billion won in operating profit.
Business diversification is also a strength. In addition to substrates for semiconductor packaging, Daeduck Electronics produces multilayer boards (MLB) used in artificial intelligence (AI) accelerators and other applications.
"With FC-CSP, FC-BGA, and MLB all on an upcycle, combined with the effect of additional capacity expansion, earnings are expected to grow steadily," Meritz Securities analyst Yang Seung-soo said in a report. "In particular, we expect the full-scale mass production of large-area FC-BGA products and the expansion of MLB sales."
