[Click eStock] "Tes, Q2 DRAM Equipment Investment Resumption Expected"

Kiwoom Securities Report

On the 4th, Kiwoom Securities maintained a buy rating and a target price of 28,000 KRW for TES.

TES's first-quarter sales are expected to be 52.4 billion KRW, and operating profit 5.9 billion KRW, both decreasing by more than 31% compared to the previous quarter. This is because the schedule for supplying new equipment to Samsung Electronics' Pyeongtaek Plant 3 has been delayed, causing some of the sales expected to be recognized in the first quarter to be deferred to the second quarter. Park Yu-ak, a researcher at Kiwoom Securities, said, "However, quarterly performance volatility due to changes in customer schedules is a common issue across the semiconductor equipment industry," adding, "The impact on the stock price will be limited."

The expected sales and operating profit for the second quarter are 62.3 billion KRW and 7 billion KRW, respectively, representing an increase of about 19% compared to the previous quarter. This is because the equipment sales revenue for Samsung Electronics' Pyeongtaek Plant 3, which was deferred in the previous quarter, will be recognized, and equipment sales related to customers' transition to memory semiconductor processes are also expected to be added. Additionally, new equipment orders for DRAM destined for Samsung Electronics' Pyeongtaek Plant 3 are anticipated in the second quarter, which is expected to increase visibility for future performance growth.

Recovery in the NAND market is also expected. The company anticipates that demand growth and price increases for NAND will accelerate in the second half of this year. In this NAND upcycle, Samsung Electronics, which has abundant liquidity, is expected to monopolize the increased demand for server-oriented eSSD, and during this period, TES is predicted to show significant performance growth through the localization of equipment such as BSD.

Researcher Park Yu-ak stated, "Starting from 2024, the supply of foundry equipment (PECVD, GPE, BSD) will begin, adding benefits from Samsung Electronics' Taylor investment," and evaluated, "Although TES's stock price has recently surged, it is worth increasing exposure by focusing on the improvement in the NAND market and equipment localization."