[Featured Stock] SMEC, "Hyundai Wia Machine Tool Acquisition Is a Mid-to-Long-Term Positive"... Currently 'Undervalued' on Core Business Alone

SMEC is on the rise. It is currently undervalued based solely on its core business value, and the analysis suggests that the acquisition of Hyundai Wia's machine tool division has secured mid- to long-term positive factors.

As of 3:12 PM on the 21st, SMEC was trading at 3,435 KRW, up 55 KRW (1.63%) from the previous trading day.

SMEC, established in June 1999, is a specialized machine tool company that manufactures CNC lathes, machining centers, and related parts, as well as industrial robots, and sells them.

Hwang Se-hwan, a researcher at FS Research, stated, "SMEC, together with the newly established private equity fund (PEF) Rilson Private Equity (PE), has agreed to acquire Hyundai Wia's machine tool division and has been selected as the preferred bidder. The acquisition price is around 340 billion KRW, and it is known that about 70% of the acquisition funds will be provided by Rilson PE. Based on this, it is estimated that SMEC will pay approximately 100 billion KRW."

He added, "If SMEC succeeds in the acquisition together with the PE, it is expected to recognize Hyundai Wia's machine tool division's performance on a consolidated basis, which will significantly improve the income statement results. While SMEC mainly had machine tools used in the IT sector, Hyundai Wia sells machine tools for the automotive sector, so the two companies' areas do not overlap, and there should be no difficulty in maintaining each company's growth potential."

Furthermore, he said, "Since there have been long-standing rumors about the sale of Hyundai Wia's machine tool division, proper business operations were likely difficult. Therefore, if the well-established SMEC acquires and normalizes the company, Hyundai Wia's performance will greatly improve, and SMEC's consolidated performance can grow significantly."

He concluded, "SMEC's sales are projected to be 250 billion KRW this year, and Hyundai Wia's machine tool division had sales of about 400 billion KRW last year. If the acquisition succeeds, synergy effects and a performance jump are expected."