Gaonchips: Model Fair Value Estimate Rises to ₩1,225 per Share, Still Far Below Market Price

What happened

On 2026-10-22 the valuation model's base estimate moved from ₩782 to ₩1,225 per share, a rise of 57%. The bull case moved from ₩3,337 to ₩3,901, and the bear case stays at ₩0. The model is still a 5-year discounted cash flow with an 8.3% rate, based on trailing figures to H1 2026.

No new filings accompany this change, and no filing excerpts were provided. The data does not say what drove the revision. The reasons behind it are not available to us.

The latest close was ₩36,650 on 2026-10-20, down 14.3% over one month and 35.0% over one year. The 52-week low is ₩34,500.

What it changes for the thesis

The previous report, published on 2026-10-19, described a business with recovering sales but continuing losses, with shares near 52-week lows. That thesis is unchanged. Trailing revenue is ₩86.1B, the operating loss is ₩9.1B (operating margin -10.6%), and free cash flow is positive at ₩27.2B.

The higher estimate does not show that profitability has returned. The report's open questions remain: whether upcoming filings show a return to operating profit, and what the recent supply contract filings and the AI chip design news are worth financially. Their size is not in the data.

What it changes for the valuation

Our model estimate is now ₩1,225 per share in the base case, with a bear case of ₩0 and a bull case of ₩3,901. The previous report had ₩782 base, ₩0 bear and ₩3,337 bull. This is a model estimate based on the assumptions shown, not a target.

Against the ₩36,650 share price, the base estimate is about 3.3% of the market price, up from about 2.1% of the ₩37,400 price used in the previous report. Even the bull case is well below the price. Price-to-book is now 6.1 and price-to-sales 5.1. Price-to-earnings and EV/EBITDA are not available because earnings are negative. The market is still pricing in much stronger results than the model assumes.

Closing view

The model revision is large in percentage terms but small against the share price, so the gap the previous report highlighted is essentially unchanged. The evidence stays mixed: sales have recovered and cash exceeds borrowings, while operating and net losses persist. What would change the picture is reported earnings, not a shift in the model estimate. Investors should watch for a return to operating profit and for any disclosed size of the new contracts.

Model estimate of fair value

Bear

₩0

-100%

Base

₩1,225

-96%

Bull

₩3,901

-88%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Base case of the 5-year discounted cash flow model on the stock's Valuation tab (statements TTM to H1 2026; discount rate 8.3%). Bear and Bull move the main assumptions by fixed steps. See and change the assumptions

Filings and data used

• 5%+ holding reportOct 14, 2026
• Major sales or supply contractOct 8, 2026
• Trust Contract Termination Result ReportOct 2, 2026
• Material Matters Report (Decision on Termination of Trust Agreement for Own Share Acquisition)Oct 2, 2026
• Amended: Major sales or supply contractOct 1, 2026
• 5%+ holding reportSep 29, 2026
• 5%+ holding reportSep 14, 2026
• Buyback trust contract signedSep 3, 2026
• 5%+ holding reportAug 26, 2026
• Half-year report (Jun 2026)Aug 14, 2026
• 5%+ holding reportAug 7, 2026
• Insider shareholding reportAug 7, 2026
• KAI to equip next-generation unmanned aerial vehicle with domestic AI semiconductor; GAONCHIPS takes part in Samsung 8nm designOct 19, 2026
• Daily prices up to 2026-10-20
• Financial statements, trailing 12 months as of H1 2026
• Our fair value model, statements as of TTM to H1 2026

Report history

1. Oct 21, 2026Update noteModel fair value changeGaonchips: Model Fair Value Estimate Rises to ₩1,225 per Share, Still Far Below Market Price
2. Oct 19, 2026InitiationStart of coverage (reader request)Gaonchips: Revenue Recovering in 2026 but Losses Persist and Shares Sit Near 52-Week Lows