DB HiTek CO (000990) Q3 2024 earnings summary

Executive summary

• Q3 FY2024 revenue reached W289.4BN, down 3% sequentially but up 8% year-over-year, with operating profit at W49.2BN, down 27% QoQ and 2% YoY, impacted by higher electricity and depreciation costs.

• Net profit rose 11% QoQ and 36% YoY to W71.4BN, with net profit margin improving by 4 percentage points QoQ and 5 percentage points YoY.

• Revenue for the first nine months of 2024 was 847.7 billion KRW, down from 1,154.2 billion KRW year-over-year, reflecting a challenging market environment.

• Operating income for the same period was 155.5 billion KRW, a significant decrease from 265.4 billion KRW in the prior year.

• The company maintained a strong balance sheet with total assets of 2.33 trillion KRW and a low debt ratio of 19%.

Financial highlights

• Gross profit for Q3 was W100.3BN, down 13% QoQ but up 8% YoY; gross margin remained stable at 35%.

• EBITDA was W88.8BN, down 16% QoQ but up 6% YoY, with EBITDA margin steady at 31%.

• Gross margin for the period was 36.5%, down from 45.2% in the previous year.

• Basic EPS for the nine months was 4,301 KRW, compared to 6,241 KRW year-over-year.

• Cash and cash equivalents at period end were 195.4 billion KRW, down from 253.3 billion KRW at the end of last year.

Outlook and guidance

• 8" foundry market expected to recover in 2025 after bottoming in Q4 2024; market growth forecast to shift from -2% in 2024 to +5% in 2025.

• Utilization rate projected to be mid-70% in 2024, exceeding 80% in 2025, with rapid rebound anticipated due to capacity expansion and strong customer demand.

• The company expects continued demand for analog and power semiconductors, especially in automotive and industrial applications.

• Management plans to expand high-value product lines such as SiC and GaN, and to strengthen its position as a specialty foundry.

• Mass production of silicon capacitors planned for 2025, with GaN and SiC products scheduled for 2025 and 2027.