[Click eStock] "Wonik QnC, Expecting Earnings and Stock Price Rebound Next Year... Target Price Down"

Shinhan Investment Corp. forecasted on the 6th that Wonik QnC's performance and stock price could rebound next year. The investment rating was maintained at 'Buy,' but the target price was lowered from 43,000 KRW to 40,000 KRW, reflecting a downward revision of earnings estimates.

Researcher Oh Kang-ho of Shinhan Investment Corp. stated, "Although the earnings per share (EPS) estimate was revised downward, the multiple (enterprise value multiple) was raised," adding, "The reason for raising the multiple despite conservative earnings estimates is due to expectations of industry recovery and diversification of entry into upstream markets (non-memory, raw materials, etc.). The year 2024 is expected to be a period of multiple re-rating." He also added, "It is notable that the company holds sufficient mid- to long-term growth momentum as a leading domestic component manufacturer."

Wonik QnC recorded sales of 179.1 billion KRW and operating profit of 13.3 billion KRW in the third quarter of this year. These figures represent decreases of 12% and 64%, respectively, compared to the same period last year. Researcher Oh analyzed, "Due to the slowdown in semiconductor demand, earnings estimates have been revised downward for three consecutive quarters. Key products, quartz and cleaning, decreased by 25% and 11%, respectively, and the subsidiary (Momentive), which forms the foundation of earnings strength, also experienced slowed growth."

Performance and stock price rebound are expected next year. Researcher Oh explained, "The recovery phase in terms of performance is expected in the second half of next year," adding, "The recovery of IT set demand and diversification of applications will lead to increased operating rates and consumable demand." Historically, benefits have been seen from customer facility expansion, increased demand due to miniaturization processes, and diversification of global equipment and customers. Researcher Oh said, "We anticipate a full-scale performance rebound in the second half of next year as demand from major customers improves," and explained, "This is why operating profit in the third quarter of next year is expected to reach 30.9 billion KRW, a 133% increase compared to this year."

Stock price appreciation is also anticipated accordingly. Researcher Oh noted, "This is a timing worth paying attention to from a stock price perspective," explaining, "Past cases show that semiconductor cycle recovery and expansion of customer facility investments have led to stock price movements that precede earnings, and the momentum is sufficient."