[Click eStock] "Wonik QnC to Become a Refuge in a Sluggish Industry"

BNK Investment & Securities Report

[Asia Economy Reporter Minji Lee] BNK Investment & Securities stated on the 26th that they expect Wonik QnC to maintain stable performance in the second half of the year, recommending a buy rating with a target price of 34,000 KRW.

Wonik QnC is one of the world's top two quartzware (quartz glass) manufacturers. Its market share is around 25%. More than half of its customers are semiconductor etching equipment companies, with the rest being IDM and foundry companies. The three major clients, LAM, TEL, and Samsung Electronics, account for over 70% of sales.

Quartz is a consumable item that requires periodic replacement, with a lifespan ranging from 6 months to 3 years. The etching process cycle is short, about one month. Based on consolidated sales in the first half of the year, the sales composition is 39% quartzware, 12% precision parts cleaning, 4% ceramic products, 1% lamps, and 45% from the subsidiary Momentive.

Minhee Lee, a researcher at BNK Investment & Securities, explained, “Despite the recent contraction in the memory market, the company's performance in the second half is expected to better meet market expectations. Since the etching equipment of the company's main customers, LAM and TEL, has a very short replacement cycle of one month, the company holds a favorable position.”

Additionally, for quartz, the demand for consumables is steady as it is proportional to the wafer input volume, number of processes, and operating rate of semiconductor customers, unless severe recession leads to production cuts. In fact, demand is increasing due to semiconductor miniaturization and advancement.

Researcher Minhee Lee added, “The company is actively pursuing M&A, and its subsidiary Momentive currently has a one-year order backlog secured. The recently acquired Costech is expected to be consolidated from the fourth quarter, leading to an anticipated 12% growth in the company's sales next year.”