US Cold Wave Halts Operations at Austin Semiconductor Plant... "Positive Impact on First Half Earnings"
[Asia Economy Reporter Gong Byung-sun] An analysis has emerged that Wonik QnC, which was somewhat sluggish in the fourth quarter of last year, could recover again. This is because Samsung Electronics has started investing in its second factories in Xi'an, China, and Pyeongtaek, Gyeonggi Province, while the semiconductor manufacturing plant (FAB) in Austin, USA, has been shut down for a month, leading to a surge in demand for parts replacement. Accordingly, Cape Investment & Securities raised Wonik QnC's target stock price from the previous 23,000 KRW to 26,000 KRW, maintaining a 'Buy' rating.
According to Cape Investment & Securities on the 21st, Wonik QnC was somewhat sluggish in the fourth quarter of last year. As the semiconductor investment intensity of its clients weakened, sales of quartz glass used in semiconductor processes decreased by 5.1% compared to the previous quarter. The consolidated operating profit margin was 2.7%, showing some weakness. However, Park Seong-soon, a researcher at Cape Investment & Securities, interpreted this as a slump due to year-end bonuses and one-time expenses.
Quartz sales are expected to return to an upward trend from the first quarter of this year. Researcher Park said, "As Samsung Electronics invests in the second factories in Xi'an, China, and Pyeongtaek, Gyeonggi Province, quartz sales are expected to rise." In particular, the recovery of demand from Tokyo Electron, which had undergone strong inventory adjustments, is raising expectations.
The shutdown of the Austin FAB in the US for a month due to a cold wave also acted as a positive factor for Wonik QnC. The Austin semiconductor foundry (contract manufacturing) plant stopped operations on the 16th of last month and has not yet resumed. Currently, power and water supply are maintained, but equipment inspection work for line restart is reportedly taking longer. Accordingly, Researcher Park analyzed, "The increase in parts replacement demand will have a positive impact on Wonik QnC's performance in the first half of the year."
Considering the investment plans of clients this year, performance is expected to increase as the quarters progress. Samsung Electronics' NAND and DRAM production capacity is expected to expand this year. SK Hynix is also expected to invest conservatively in facilities but is projected to invest about 30K per month in both NAND and DRAM. In the cleaning sector, the operation of the Xi'an 2nd factory is expected to improve the performance of the Xi'an corporation, leading to performance improvement in the second half of the year.
Reflecting this, Cape Investment & Securities raised the target stock price to 26,000 KRW. Researcher Park said, "Wonik QnC's sales this year are expected to increase by 9% year-on-year to 573.4 billion KRW, and operating profit is expected to rise 76.6% to 72.8 billion KRW," adding, "If the new items in the cleaning sector complete quality certification procedures within this year, it could lead to additional performance upgrades."
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