[Click eStock] Wonik IPS, Performance Befitting the Pioneer of Semiconductor Equipment Localization

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 9th that it maintains a Buy rating and a target price of 62,000 KRW for Wonik IPS.

Wonik IPS supplies deposition equipment, heat treatment equipment, and etching equipment (for display processes). In Q1 2021, it achieved sales of 254.5 billion KRW, operating profit of 24.3 billion KRW, and net profit of 25.7 billion KRW. In Q2, sales reached 432.5 billion KRW, operating profit 100.8 billion KRW, and net profit 76.0 billion KRW. This represents increases of +69.9%, +315.3%, and +196.2% respectively compared to the previous quarter. Compared to the same period last year, sales, operating profit, and net profit increased by +42.6%, +96.6%, and +114.5% respectively. Semiconductor equipment contributed more than 80% of sales, driving performance growth.

Comparing Q2 results to consensus estimates (sales 400.1 billion KRW, operating profit 80.0 billion KRW), sales of 432.5 billion KRW met consensus, and operating profit of 100.8 billion KRW exceeded consensus. Unlike other semiconductor/display equipment suppliers, sales are relatively difficult to estimate precisely because revenue recognition is based on equipment setup rather than progress or delivery standards. Therefore, if the difference between consensus sales and actual announced figures is around 30 billion KRW, it can be considered essentially in line with consensus. The operating profit surpasses the annual operating profit of most semiconductor equipment suppliers. The reason operating profit exceeded consensus is that semiconductor equipment contributed much more to sales than display equipment.

Reflecting strong Q2 performance, the estimated full-year 2021 results are sales of 1.314 trillion KRW, operating profit of 214.2 billion KRW, and net profit of 168.7 billion KRW. Growth drivers for 2022 include Samsung Electronics’ Pyeongtaek P3 expansion effect and the start of non-memory foundry facility investments in the U.S. Considering the increasing application of semiconductor deposition equipment in detailed processes and the investment effects in upstream industries, 2022 full-year results are estimated at sales of 1.5111 trillion KRW, operating profit of 271.0 billion KRW, and net profit of 203.7 billion KRW.

Kim Kyung-min, a researcher at Hana Financial Investment, said, "Although we want to raise the target price considering the strong Q2 results, we will maintain it at 62,000 KRW for now," emphasizing, "For the Pyeongtaek P3 expansion expectations to impact the stock price, investor attention is expected to focus on Q4 when the infrastructure equipment begins to be brought in."