[Click eStock] "Wonik QnC, Early Stage of Performance Improvement... Target Price Raised by 43%"

Major Materials and Components Suppliers in Pre-Process Show Performance Growth from Q1
Gumi and Taiwan Accelerate Quartz Capacity Expansion
Quartz Sales Expected to Rapidly Increase Until Next Year

Hanwha Investment & Securities maintained a 'Buy' rating on Wonik QnC on the 12th, stating that it is at the beginning of a performance improvement phase, and raised the target price by 43% from the previous 35,000 KRW to 50,000 KRW. Wonik QnC's closing price on the previous trading day was 37,600 KRW.

Researchers Kim Kwangjin and Choi Youngju of Hanwha Investment & Securities said, "The target price was calculated by applying a target P/E (price divided by EPS) of 15.X to the average earnings per share (EPS) for 2024-2025, reflecting the visibility of earnings growth through next year," adding, "Considering that it is at the beginning of a performance improvement phase and the current valuation levels of peer companies in the industry, this is a reasonable level." They also noted, "Although this year's performance is expected to exceed market expectations, it is important to recognize that next year's performance is more significant."

Materials and components companies in the upstream process have entered a full-scale earnings growth phase from the first quarter due to normalization of demand in the downstream sector. This trend is expected to continue through next year. Accordingly, Wonik QnC is accelerating the expansion of quartz capacity in Gumi and Taiwan, which had been slowed due to last year's market downturn. To prepare for increased quartz demand through next year, the company has sped up the equipment installation for new expansion lines, with the Taiwan expansion expected to be completed within this year and the Gumi expansion by the first half of next year. Quartz sales are expected to rapidly increase from 251.9 billion KRW last year to 311.6 billion KRW this year and 388.8 billion KRW next year. Due to the recovery in the market, the company's operating profit is also expected to exceed market expectations, reaching 141 billion KRW this year and 171.9 billion KRW next year.

Operating profit for the second quarter is projected at 35.9 billion KRW. The effect of normalized line operation rates at downstream customers, which underpinned the strong first-quarter performance, is expected to continue into the second quarter, supporting stable earnings growth. The expected results for the second quarter are sales of 220.2 billion KRW and operating profit of 35.9 billion KRW. Researchers Kim Kwangjin and Choi Youngju stated, "Due to the fixed cost effect from sales growth, profitability in the quartz segment is likely to improve further compared to the first quarter, and the subsidiary Momentive is expected to maintain high profitability due to strong earnings in the ceramics segment."