[Click eStock] STI Surpasses Last Year's Performance Already, 'Continuous Orders'

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities announced on the 17th that it has initiated coverage on STI with a 'Buy' investment rating and a target price of 18,850 KRW. This is based on the judgment that earnings growth will continue, supported by sustained order growth that has already surpassed last year's performance. The target price was calculated by applying a price-to-earnings ratio (PER) of 8.3, the lower end of STI's recent 5-year PER range, to the estimated 2022 earnings per share (EPS) of 2,269 KRW.

The growth of STI's core product, C.C.S.S (automated equipment supplying chemicals necessary for semiconductor processes), is expected to continue. This is because major client Samsung Electronics is anticipated to continue investing in new factories, following Pyeongtaek Plant 3 with Pyeongtaek Plant 4 and a new factory within the Taylor plant in Texas, USA. STI has also established a local subsidiary to respond to the US market.

Furthermore, the fruits of continuous R&D (research and development) investments have been evident since the second half of 2021. STI has developed and successfully secured orders for semiconductor post-process reflow equipment, semiconductor substrate FC-BGA developing equipment, and display OCR equipment. Researcher Kwon Myung-jun of Yuanta Securities stated, "From 2022, with the full-scale recognition of sales from new equipment, a shift in perception from an infrastructure equipment company to a process equipment company is expected," emphasizing that "this could act as a factor for valuation upgrades."

With the expansion from foldable phones to foldable laptops and tablets, growth and increased investment in the foldable display market are anticipated. STI has developed OCR equipment for foldable OLEDs and has experience in securing orders.

Researcher Kwon forecasted, "This year's expected performance is sales of 418.6 billion KRW and operating profit of 34.2 billion KRW, representing growth of 31.0% and 33.8% respectively compared to the previous year," adding, "Given the continued rise in order backlog, the realization of these figures is highly likely."