[Click eStock] "Park Systems, 2Q Earnings Below Expectations... Growth to Accelerate in Second Half"

[Asia Economy Reporter Myunghwan Lee] Kiwoom Securities announced on the 18th that it maintains a buy rating on Park Systems but lowers the target price from the previous 180,000 KRW to 140,000 KRW. This adjustment reflects the downward revision of the annual earnings forecast following the company's underperformance against market expectations in the second quarter of this year.

Park Systems reported sales of 16.5 billion KRW in the second quarter of this year, a 33% increase compared to the same period last year, and an operating profit of 100 million KRW, turning profitable. However, these figures fell short of market expectations. Kiwoom Securities analyzed that many of the orders Park Systems received early this year were scheduled for shipment in the second half, and additional delivery delays occurred due to overlapping factors such as airport closures in China, resulting in underwhelming performance. They also noted that profitability declined due to increased staffing and raw material price hikes.

Nonetheless, they advised paying attention to the solid order status in the second quarter. Park Systems has shown a performance trend of lower first half and stronger second half over the past several years. Even without additional new equipment orders after the first quarter, new orders nearly doubled compared to the same period last year. According to Kiwoom Securities, Park Systems' order amount in the first half is estimated to exceed 90 billion KRW.

Kiwoom Securities expects Park Systems' earnings growth to accelerate from the third quarter of this year. As of the end of June, the company's order backlog was approximately 83 billion KRW, and with active revenue recognition starting in the third quarter, the company is expected to show a performance trend of lower first half and stronger second half. Kiwoom Securities forecasts rapid profitability improvement as delayed deliveries to Chinese companies proceed and high-priced new equipment already ordered is shipped. Additional orders for EUV mask equipment and display equipment are also expected in the second half.

Hyunjin Oh, a researcher at Kiwoom Securities, stated, "We focus on the still valid mid- to long-term growth potential in this early growth phase," and added, "Considering that the current stock price is positioned at the lower end of the price-to-earnings ratio (PER) band due to the impact on the upstream industry, we maintain a 'buy' rating."