[Click eStock] Wonik IPS, Short-Term Growth Momentum Slows... Target Price Lowered

Kiwoom Securities Report

On the 7th, Kiwoom Securities maintained a buy rating on Wonik IPS but lowered the target price by 5% to 40,000 KRW.

In the second quarter, Wonik IPS is expected to record sales of 200.2 billion KRW and an operating profit of 9.9 billion KRW, representing a 33% increase in sales compared to the previous quarter and a turnaround to profitability in operating profit. However, profitability is predicted to be weaker than expected. Although the semiconductor segment is expected to recover due to the equipment installation effect at Samsung Electronics' Pyeongtaek Plant 3, the display segment is anticipated to continue experiencing a gap in orders. By business segment, semiconductor sales are projected to grow 37% quarter-on-quarter to 186.4 billion KRW, while the display segment is forecasted to decline by 23% to 13.8 billion KRW.

For the third quarter, sales are expected to increase by 1% quarter-on-quarter to 202.8 billion KRW, while operating profit is forecasted to decrease by 11% to 8.8 billion KRW. Operating profit in the third quarter is also estimated to be lower than market expectations. This is due to the burden of selling and administrative expenses for preparing new businesses and a decrease in the sales proportion of the semiconductor segment, which are expected to negatively impact the company's profitability. A significant portion of Samsung Electronics' DRAM capital expenditure, initially expected in the second half of this year, is likely to be delayed until next year, leading to weak performance until the first half of next year.

If considering investment, it is advisable to take a mid- to long-term approach. Park Yu-ak, a researcher at Kiwoom Securities, said, “Wonik IPS's stock price quickly recovered from the year-end low due to improved investor sentiment toward the semiconductor sector,” adding, “In the short term, the downward revision of Samsung Electronics' DRAM capital expenditure in the second half and the recovery sequence of the memory semiconductor market may worsen investor sentiment across the semiconductor equipment sector, so it is necessary to focus on mid- to long-term growth potential.”