[Click eStock] "Tes, Lower Earnings Forecast for Second Half... Target Price Down"

[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Securities analyzed on the 19th that Tes's second half performance will fall short of initial expectations. Accordingly, they maintained a 'Buy' investment rating and lowered the target price to 28,000 KRW.

Park Yoo-ak, a researcher at Kiwoom Securities, stated, "It is understood that Samsung Electronics' P3 mass production timing for both NAND and DRAM has been postponed to the third quarter and the first quarter of next year."

Researcher Park predicted, "The third quarter performance will see sales increase by 8% quarter-on-quarter to 95.4 billion KRW, and operating profit will grow by 38% to 18.7 billion KRW, showing growth compared to the second quarter."

He explained, "This is because equipment deliveries and sales recognition for SK Hynix's M15 and M16, as well as Samsung Electronics' P2, are expected. The Parts division's sales are also expected to record 18.4 billion KRW, a 7% increase from the previous quarter."

However, he forecasted that fourth quarter sales will decrease by 23% quarter-on-quarter to 73.1 billion KRW, and operating profit will drop by 72% to 5.2 billion KRW, declining compared to the previous quarter. This is due to the postponement of Samsung Electronics' P3 DRAM mass production to 1H23, which delays Tes's equipment sales recognition timing.

Nonetheless, Researcher Park evaluated, "Considering the recent rapid volatility in the industry, there is also a possibility that equipment sales recognition for P3 DRAM will be reflected in the fourth quarter, resulting in performance exceeding estimates."

Regarding Tes's stock price, Researcher Park judged, "Although quarterly performance after the third quarter is expected to show significant volatility, the valuation at historical low levels will strongly support the downside rigidity of the stock price."

He added, "After a period of adjustment, it is expected that Samsung Electronics' P3 and P4 investments and the rebound in the memory market will begin in earnest around the end of this year to early next year, attempting an upward turnaround."