Hanmi Semiconductor’s Skyrocketing Stock: Investors Weigh In

The stock price of Hanmi Semiconductor Co has experienced a mind-blowing surge of nearly 1,200% since the end of 2022. This remarkable rise has made the company a hot topic among investors, some of whom are now choosing to cash out, worried about the high valuations. As it stands, Hanmi Semiconductor is the priciest stock among its regional chip-related peers when looking at forward earnings estimates. This surge reflects the booming demand for the company’s AI-related chipmaking equipment, which has captured significant investor interest.

Incredible Surge: 1,200% Increase Since Late 2022

Despite the positive buzz, there are concerns about the stock being overvalued. Hanmi Semiconductor’s strong performance, driven by its AI-related chipmaking equipment, and the buying of shares by its billionaire CEO, Kwak Dong Shin, appear to be fully priced in. Foreign investors, who heavily invested in the shares last year, have started to reduce their holdings. Foreign ownership of Hanmi Semi has decreased from 16.5% in mid-February to 13.2% as of this past Wednesday.

Yoon Joonwon, a fund manager at DS Asset Management Co., mentioned, “People who bought out of ignorance have left, and now some investors are having second thoughts.” While foreigners are attracted by the potential, they are becoming more cautious. On the other hand, local funds seem to be holding onto their shares despite some doubts.

Top Performer Despite Doubts: Valuation Concerns and Foreign Investor Activity

Hanmi Semi has more than doubled its stock price this year alone, making it the top performer on the MSCI Asia Pacific Index. This is largely due to excitement over the company’s thermal compression bonders, which are supplied to SK Hynix Inc. for making high-bandwidth memory used by companies like Nvidia Corp. Additionally, Hanmi Semiconductor recently secured an order from Micron Technology Inc.

CEO Kwak Dong Shin’s growing stake in the company, now worth $3.7 billion, has been another factor boosting investor confidence. His continual share purchases over the past year, along with expectations that Hanmi Semi will be added to the blue-chip Kospi 200 Index in the June review, have served as additional positive catalysts.

Hanmi Semiconductor: Future Prospects and Market Reactions

Despite the high price-to-earnings ratio, some investors remain optimistic. Jay Kwon, an analyst at JPMorgan Chase & Co., acknowledged last year’s weak results but highlighted Hanmi’s projected strong recovery in 2024. He pointed out potential upsides from additional order wins, noting that the company expects thermal compression to dominate AI memory makers for the next three years. Hanmi believes its superior technology will give it an edge over competitors like ASMPT Ltd.

However, not everyone is convinced the rally will continue. “The stock is very expensive based on the price-to-earnings ratio, so I’m not sure if there are any more legs to this rally,” said Ahn Hyunsang, CEO at Korea Investment Research Institute.

Currently, some investors are locking in profits. On Thursday, the Hanmi Semiconductor stock closed 0.6% lower, after initially rising as much as 3.7% following Nvidia’s bullish forecast and South Korea’s announcement of a $19 billion incentive package for the chip sector.