LEENO Industrial posted second-quarter results this year that exceeded market expectations. Meritz Securities maintained its 'Buy' investment opinion, expecting new application expansion to support earnings even if mobile-related volumes decline in the second half. However, it lowered the fair value from the previous 140,000 won to 113,000 won.

■ Q2 Operating Profit of 73.5 Billion Won... 11% Above Market Expectations

According to Meritz Securities, LEENO Industrial's revenue for the second quarter of 2026 came to 143.2 billion won, up 27% year-on-year. Operating profit rose 38% to 73.5 billion won, with an operating margin of 51.3%. Operating profit exceeded market expectations by about 11%.

By product, LEENO PIN revenue increased 47% from a year earlier. Meritz Securities attributed this to robust demand from existing IT and semiconductor applications combined with increased demand for test sockets. Test socket revenue also grew 28% year-on-year. The seasonal peak for mass-production mobile products and a rise in average selling prices following customers' adoption of the new WMCM packaging were also analyzed as contributing factors.

In particular, test socket exports to China surged. Meritz Securities noted that second-quarter test socket exports to China jumped 573% year-on-year, estimating that expanded shipments of sockets for network and communication semiconductors to Greater China clients played a role.

■ Second-Half Decline in Mobile Volumes a Variable... "New Applications Will Offset"

A decrease in mobile-related volumes in the second half is cited as a variable. As seasonal peak demand for mobile test sockets is concentrated in the second quarter, earnings from the third quarter could fall compared to the previous quarter. Meritz Securities forecast LEENO Industrial's third-quarter operating profit at 56 billion won and fourth-quarter at 51.7 billion won, up 16% and 28% year-on-year, respectively.

However, it projected that expansion into new applications beyond mobile could offset second-half earnings. The key point is that test socket applications are broadening to high-performance computing (HPC), artificial intelligence (AI), and network and communication semiconductors.

The fact that quarterly LEENO PIN revenue surpassed 30 billion won for the first time in 16 quarters was also evaluated positively. Meritz Securities left open the possibility that future earnings forecasts could be raised further if overall test socket market expansion translates into structural growth for pin products.

■ Union General Strike a Short-Term Variable... Prolongation Could Increase Earnings Volatility

In the short term, labor-management issues are a variable. Meritz Securities noted that LEENO Industrial's union has been staging a general strike since July 23, and analyzed that short-term earnings volatility could increase if the strike is prolonged.

Taking these results and the second-half business environment into account, Meritz Securities maintained its 'Buy' investment opinion on LEENO Industrial and presented a fair value of 113,000 won.

[※ This article was written for informational purposes based on securities firm research materials and does not recommend the purchase or sale of specific stocks or guarantee investment returns. Securities firms' investment opinions and fair values may change depending on market conditions and company performance, and the final judgment and responsibility for investments rest with the investor. This article was written with AI assistance.]