[Click eStock] "Wonik QnC, Expected Sales Growth in 2020... Maintain Buy"

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating and target price of 21,000 KRW on Wonik QnC on the 9th, expecting sales expansion this year.

In the fourth quarter of last year, Wonik QnC recorded sales of 69.1 billion KRW and operating profit of 9.6 billion KRW, increasing by 10% and 52% respectively compared to the previous quarter. Net profit surged about 2000% to 18 billion KRW during the same period.

Researcher Subin Lee of Daishin Securities explained, “Sales in the separate business division increased by 21% compared to the previous quarter, reflecting the recovery trend in the memory market,” adding, “From the third quarter, the operating rate of memory semiconductors increased, significantly raising the consumption of quartz consumables, and sales to the US equipment company Lam Research also greatly increased.”

The Taiwan subsidiary recorded solid performance in the fourth quarter, but profitability declined due to the reflection of performance bonuses.

Net profit greatly increased due to some operating profit generated from total return swap (TRS) derivatives based on Wonik Holdings’ stock price. It was also influenced by the reversal of about 9 billion KRW in losses related to Momentive shares.

Sales this year are expected to reach 515.4 billion KRW, a 96% increase from the previous year. This expectation is based on the judgment that the client company Lam Research will show high growth in the etching equipment sector. Operating profit is also expected to rise 138% to 65 billion KRW.

Researcher Subin Lee explained, “Sales of consumables used in Lam Research’s etching equipment will increase,” and added, “Lam Research aims for over 40% growth in parts and after-sales service business sectors by 2023, so mid- to long-term performance improvement of Wonik QnC is expected.”