[Click eStock] "TCK, Possibility of Growth Rate Deterioration in the Second Half"

Lost patent lawsuit on the 2nd... Inevitable damage to monopoly power
Samsung Securities "TCGK target price lowered from 250,000 won to 180,000 won"

[Asia Economy Reporter Gong Byung-sun] TCK, which lost a patent lawsuit related to single-level cell (SLC) materials and silicon carbide (SiC) composite materials, is expected not to maintain monopoly power in its future core sectors. However, the securities industry believes that the direction remains valid as differentiation is possible in terms of technology and production capacity.

On the 23rd, Samsung Securities maintained its investment opinion of "Buy" on TCK but lowered the target price from 250,000 KRW to 180,000 KRW. As of the 17th, TCK's closing price was 143,000 KRW.

The loss in the patent lawsuit led to the downward revision of the target price. On the 2nd, the Patent Court ruled the patents related to TCK's SLC materials and SiC composite materials invalid. Consequently, on the 3rd, TCK's stock price plunged by 14.76%, showing a downward trend.

Samsung Securities opines that doubts about TCK's future growth are inevitable. It will be difficult for TCK to fully absorb the growth rate of SiC rings, and its overwhelming market share in the SiC ring before-market segment may slightly decrease depending on the entry speed of competitors such as Hanwha Materials. The before-market refers to product groups where parts are pre-installed before shipment.

(Provided by Samsung Securities)

There are also views that the growth rate in the second half of the year could be impaired. Competitors are actively penetrating the market, gradually eroding part of the total market size. Researcher Bae Hyun-gi of Samsung Securities said, "The growth rate in the second half is expected to be lower than previously estimated," adding, "There is a possibility of further stock price declines as the market consensus is revised downward for the last time in the third quarter of this year." Currently, the consensus for TCK's annual sales and operating profit stands at 272.3 billion KRW and 104.3 billion KRW, respectively.

However, technology and production capacity are still expected to be differentiable. Currently, TCK's production capacity per piece of equipment is known to be about three times larger than that of competitors. This is possible due to high yield and technological expertise such as know-how on chemical vapor deposition (CVD) row equipment. Researcher Bae explained, "As a before-market company, TCK has long-established relationships and trust with global etching equipment companies," adding, "The possibility of a rapid deterioration of its position in the before-market is limited."