[Click eStock] "Wonik QnC, Undervalued Despite Solid Performance... Target Price Maintained"

BNK Investment & Securities analyzed Wonik QnC on the 19th, stating that it is undervalued despite solid performance. They maintained a 'Buy' rating and a target price of 33,000 KRW.

Wonik QnC reported third-quarter consolidated sales of 225.1 billion KRW, a 26% increase compared to the same period last year, and operating profit rose 126% to 29.9 billion KRW. Both figures fell short of market expectations by 3% and 19%, respectively. Minhee Lee, a researcher at BNK Investment & Securities, explained, "The sales of subsidiary Momentive, which drove strong first-half performance, declined, and operating profit margin also decreased," adding, "This was due to a decrease in ceramic powder sales caused by a slowdown in electric vehicle (EV) demand." However, she noted, "Headquarters products such as Quartzware, cleaning agents, and ceramics all performed better than expected, especially Quartzware, which recorded its highest quarterly sales since Q4 2022 due to increased market share among key customers and rising demand from some semiconductor clients."

For the fourth quarter, due to seasonal factors, consolidated sales are expected to slightly decrease to 222.9 billion KRW, with operating profit projected at 19.7 billion KRW and an operating profit margin (OPM) of 8.9%. The researcher stated, "The decline in profitability is influenced by year-end performance bonuses paid annually, and excluding this, operating profit is expected to be similar to the previous quarter." She also forecasted, "In the case of the Taiwan subsidiary, steady demand growth from foundry customers will result in sales reaching the mid-50 billion KRW range this year, growing to the low 60 billion KRW range next year."

She continued, "Due to concerns over a semiconductor demand slowdown, the stock price recently plummeted to a price-to-book ratio (PBR) of 1.1, falling to levels last seen before the 2020 pandemic," adding, "We believe the stock is excessively undervalued relative to its solid performance. From a long-term investment perspective, now is a good opportunity to buy at a low price."