[Click eStock] "Jusung Engineering, New Orders Expected to Materialize... Target Price Down"

On the 12th, NH Investment & Securities downgraded the target price of Jusung Engineering from 45,000 KRW to 35,000 KRW, reflecting the recent overall increase in volatility in the semiconductor sector. The investment rating was maintained at 'Buy.'

Ryu Young-ho, a researcher at NH Investment & Securities, explained, "We reflected the recent overall increase in volatility in the semiconductor sector along with the sharp valuation decline of global peers," adding, "The target price-to-earnings ratio (PER) was lowered by 20.1% from 18.2 times to 14.4 times."

As major clients' conversion investments are set to accelerate and new investments by key domestic clients and Chinese companies are scheduled for 2025, solid performance is expected; however, concerns about the semiconductor market downturn remain. Researcher Ryu stated, "There are concerns about reduced investments due to the semiconductor market downturn, the still high proportion of sales in China, and market worries about the underperforming display and solar businesses ahead of the split," but analyzed, "Even considering these negative factors, Jusung Engineering's stock price remains undervalued." He added, "If the acquisition of customers or new orders from global companies waiting in the market become visible, it will serve as a short-term momentum for the stock price."

The third-quarter performance this year is also expected to be favorable. Researcher Ryu said, "Jusung Engineering's third-quarter sales are expected to increase by 51.4% year-on-year to 130.4 billion KRW, and operating profit is expected to rise by 627.5% to 45 billion KRW, indicating solid performance," adding, "Sales recognition from major clients' conversion investments began in the second half, and the outline of new investments is expected to become clearer as the year-end approaches."

Strong sales in China are expected to continue into the third quarter following the second quarter. Researcher Ryu noted, "Although concerns about high sales in China remain in the market, the possibility of domestic companies becoming targets of U.S. sanctions is still low," and forecasted, "Display sales, which were sluggish in the first half, are expected to gradually recover along with supplementary investments. In the case of solar power, additional orders are expected this year, but the sales recognition timing will be in 2025."