[Click eStock] "Techwing, Weak Performance in Second Half... Improvement Expected Next Year"

[Asia Economy Reporter Ji Yeon-jin] Cape Investment & Securities announced on the 19th that it has lowered its earnings estimates for Techwing while maintaining a buy investment opinion, but lowered the target price to 26,000 KRW.

Techwing's third-quarter sales decreased by 20.6% year-on-year to 65.9 billion KRW, and operating profit fell by 31.9% to 10.7 billion KRW. Seongsoon Park, a researcher at Cape Investment & Securities, said, "The third-quarter performance fell significantly short of expectations," adding, "Due to the resurgence of COVID-19, the setup of equipment for client companies was delayed, and the performance of its subsidiary ENC Technology was sluggish. The rise in the USD-KRW exchange rate is also estimated to have had a negative impact on net profit."

It is also assessed that it is difficult to expect a sales turnaround in the fourth quarter as the weakness in memory prices begins and time is needed to improve the shortage of SSD controllers. However, next year is expected to see performance improvement as the equipment investment bottleneck caused by COVID-19 is alleviated.

Researcher Park said, "Amid the weak semiconductor memory market and ongoing external concerns, Techwing's stock price has fallen 30% from its peak due to poor third-quarter performance," adding, "Even reflecting next year's earnings estimates, it is undervalued, and the expansion of large non-memory clients and new equipment supply next year are expected to act as factors that increase corporate value."