[Click eStock] "Wonik Materials Reflects Cost Increase in Selling Price... 1Q Earnings Estimate Raised"

[Asia Economy Reporter Hwang Yoon-joo] Hana Financial Investment maintained its 'Buy' rating and target price of 46,000 KRW for Wonik Materials on the 25th, raising its earnings estimates for the first quarter of this year.

Byun Woon-ji, a researcher at Hana Financial Investment, stated, "We are revising upward the first-quarter sales and operating profit estimates for semiconductor specialty gas supplier Wonik Materials from 90.4 billion KRW and 13.6 billion KRW to 97.5 billion KRW and 15.6 billion KRW, respectively."

Researcher Byun explained, "This is due to the reflection of raw material price increases for rare gases used in semiconductors into product prices following the geopolitical issues between Russia and Ukraine, as well as considering the increase in volumes of traditional specialty gases such as F2 Mix."

The relative prices of rare gases such as neon gas, krypton gas, and xenon gas have risen by 6 times, 6.5 times, and 2 times respectively as of February 2022 compared to two years earlier (January 2020). Researcher Byun expects the price increase of rare gases to continue for at least several more months.

He said, "Following the geopolitical issues between Russia and Ukraine, the rapid spread of COVID-19 cases in China will continue to cause bottlenecks in the semiconductor supply chain," and added, "We forecast Wonik Materials' second-quarter sales to be similar to the first quarter at 98 billion KRW."

However, he expects the supply shortage situation to relatively ease in the second half of the year. Researcher Byun analyzed, "Assuming sales remain in the 90 billion KRW range, we estimate third and fourth quarter sales at 95.1 billion KRW and 93.2 billion KRW, respectively."

Researcher Byun assessed that the possibility of a sharp sales surge followed by a decline, as in 2015, is low. He explained, "In 2015, the sales proportion of deposition gases was relatively high, so if sales of a specific gas surged due to external factors, it had a significant impact on overall company performance. However, now the variety of etching and cleaning gases has increased, reducing the impact individual gas sales have on overall company performance."