[Click eStock] Delayed Facility Investment Kicks Off... "Wonik IPS Sales 1 Trillion OK"

1Q Earnings Also Strong... Ranked as Top Pick in Equipment Sector

[Asia Economy Reporter Minwoo Lee] Wonik IPS is expected to easily achieve sales of 1 trillion KRW this year. This is because equipment investments delayed due to the impact of the novel coronavirus disease (COVID-19) in memory, non-memory, and OLED sectors are expected to resume in earnest from the second half of this year.

On the 22nd, Hanwha Investment & Securities maintained a 'Buy' rating on Wonik IPS and raised the target price by 18.4% to 45,000 KRW. The closing price the previous day was 34,300 KRW. Wonik IPS was selected as the top preferred stock in the equipment sector as it possesses a diverse range of equipment products across various front-end industries.

The performance in the first quarter, which was directly affected by COVID-19, was also considered solid. Sales reached 181.9 billion KRW (semiconductors 120.8 billion KRW, displays 61.1 billion KRW), and operating profit was 14.4 billion KRW. These figures represent increases of 38.9% and 128.6%, respectively, compared to the same period last year. Researcher Soonhak Lee of Hanwha Investment & Securities explained, "Sales mainly occurred as NAND investments began at Samsung Electronics' Xi'an plant in China from the end of last year," adding, "Recognition of equipment sales to domestic display customers also happened earlier than expected."

The outlook is also positive. Due to the rapid increase in untact (non-face-to-face) demand caused by COVID-19, server investments are accelerating, and smartphone demand is expected to recover from the second half of the year. Researcher Lee analyzed, "As clients proceed with conservative investments amid uncertainties, memory supply and demand will be tight in the second half, increasing the likelihood of expanded equipment investments through next year," and added, "In displays, the introduction of new technologies such as foldable, hole displays, and Y-OCTA is accelerating, so the value of Wonik IPS, the number one domestic semiconductor/display equipment company, will be re-evaluated."

It is also forecasted that sales of 1 trillion KRW will be comfortably achieved this year. Hanwha Investment & Securities expects Wonik IPS to record sales of 976.4 billion KRW and operating profit of 135.6 billion KRW this year. Researcher Lee observed, "Major clients' 3D NAND investments are fully emerging this year, and DRAM investments are likely to increase beyond existing plans as the year progresses," adding, "With the transition to QD displays and new investments such as A5, OLED investment expectations will rise toward the end of the year, so the semiconductor and display investment cycles will continue through 2021."