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New growth drivers emerging

Reflecting memory exposure and new businesses in valuation

We raise our target price on Soulbrain to W600,000 (from W216,000), applying a target P/E of 30x―a premium to the average 2026F P/E of global semiconductor materials companies (20.7x)―to our 2026 EPS estimate of W19,858. We believe the premium is justified by the company’s above-industry 2026 operating profit growth outlook (+44%) and new business initiatives, including glass substrate materials.

While top-tier materials companies such as Entegris and TOK are trading in the high-30x P/E range, domestic names with high exposure to memory are trading at around 10x. However, given the current memory-led industry up-cycle, we believe memory-focused materials companies delivering strong earnings growth could also see meaningful valuation re-ratings.

Earnings growth to continue on semiconductor up-cycle

For 1Q26, Soulbrain posted revenue of W263.8bn (+25.9% YoY, +8.1% QoQ) and operating profit of W44.7bn (+24% YoY, +3.9% QoQ). Semiconductor materials revenue (W221.9bn) increased QoQ for a fourth consecutive quarter, backed by higher utilization rates at semiconductor customers. By category, we estimate revenue at W160bn for etchants, W16bn for CMP slurry, and W16.5bn for precursors.

Favorable end-market conditions are continuing. Initial shipments to Samsung Electronics’ (SEC) Taylor fab are expected in June, which should support continued QoQ revenue growth throughout the year. For 2Q26, we look for revenue of W272.6bn (+3.3% QoQ) and operating profit of W47.3bn (+5.8% QoQ). For 2026, we forecast revenue at W1.1tr (+20.4% YoY) and operating profit at W193bn (+44.4% YoY).

Opportunities in acetic acid-based etchants and glass substrate materials

In the near term, acetic acid-based etchants are likely to serve as a meaningful growth driver. In sub-3nm GAA transistors, SEC’s foundry uses a wet etching process to remove the SiGe sacrificial layer after formation of the Si/SiGe stacked structure. Acetic acid-based etchants are used in this process, and Soulbrain is already the exclusive supplier to SEC’s foundry (quarterly revenue of around W2bn). Supply is likely to ramp up in earnest once mass production begins for Tesla’s 2nm chips.

Over the longer term, glass substrate materials could emerge as an additional growth engine. Glass substrates are gaining attention as a next-generation semiconductor packaging technology, and Soulbrain is developing related materials such as hydrofluoric acid for through-glass via (TGV) formation, copper plating solutions/additives, and CMP slurry. Soulbrain has accumulated process data on glass surfaces based on its past experience in the thin glass (TG) business. Following pilot line setup in 3Q26, the company is likely to enter the sample delivery stage from 4Q26.