[Click eStock] Wonik Qnc, Short-Term Earnings Slump Inevitable... Target Price Downgraded

Kiwoom Securities Report
Samsung Electronics Semiconductor Facility Investment Downgraded, Target Price Revised from 41,500 KRW to 28,000 KRW

Kiwoom Securities forecasted that Wonik QnC will inevitably face short-term performance downturns due to Samsung Electronics' downward revision of semiconductor capital expenditures next year. Accordingly, on the 27th, they lowered the target price from 41,500 KRW to 28,000 KRW but maintained a 'Buy' investment rating. Wonik QnC's closing price on the 26th was 20,300 KRW.

Park Yu-ak, a researcher at Kiwoom Securities, stated in a report released that day, "Samsung Electronics, a major client, is expected to revise down its 2025 semiconductor capital expenditure (CapEx)." He analyzed, "The delay in mass production verification of the 5th generation high-bandwidth memory (HBM3e) and weak customer demand are likely to slow Samsung Electronics' HBM expansion pace, and the expansion method is expected to change from introducing new equipment to utilizing existing LPDDR4 equipment."

He continued, "The equipment transition process from LPDDR4 to HBM3e leads to a temporary decrease in semiconductor component demand, which will burden Wonik QnC's short-term performance. However, due to the influence of 'TSMC, which is recording strong performance,' and 'Lam Research, which has expanded its business in China,' Wonik QnC is expected to maintain a solid performance trend compared to other competitors."

Wonik QnC's fourth-quarter sales this year are expected to decrease by 2% year-on-year to 220.2 billion KRW, and operating profit for the same period is forecasted to drop by 36% to 19.2 billion KRW, slightly below market consensus. According to FnGuide, the sales consensus is 227.7 billion KRW, and operating profit is 20.3 billion KRW.

Researcher Park Yu-ak said, "Although performance toward TSMC and Lam Research will be solid, a decline in the Cleaning division's performance is expected due to Samsung Electronics' memory downturn." He added, "In 2025, Wonik QnC's performance is expected to grow to sales of 961.6 billion KRW and operating profit of 128.4 billion KRW, driven by Samsung Electronics' expansion of HBM3e mass production and NAND utilization recovery."

He also anticipated that the risk of further stock price decline would be limited. He said, "Wonik QnC's stock price has plummeted to around a 12-month trailing price-to-book ratio (P/B) of 1.1 due to concerns over short-term performance downturns and entering a memory market downcycle." He added, "The current stock valuation is at levels seen in 2019, when concerns over operating losses were widespread, and early 2020, when the stock market sharply declined due to COVID-19, so the risk of further price declines due to these concerns is expected to be limited."