[Click eStock] "Wonik IPS Expected to Miss Next Year's Earnings Forecast... Target Price Down"

Target Price Revised Down from 43,000 Won to 33,000 Won

On the 5th, Kiwoom Securities downgraded the target price of Wonik IPS from 43,000 KRW to 33,000 KRW, citing that next year's performance is expected to fall short of estimates due to a downward revision in capital expenditures (CAPEX) for semiconductor memory equipment. The investment opinion was maintained as 'Buy.'

Park Yu-ak, a researcher at Kiwoom Securities, stated, "We have lowered the earnings forecasts for 2025-2026 reflecting adjustments in capital expenditures in the memory semiconductor industry and revised the target price downward. However, since improvements through the supply of new equipment are becoming visible, a mid- to long-term buying approach strategy for Wonik IPS remains valid. A valuation at about 1.3 times the 12-month trailing price-to-book ratio (PBR) will limit further declines in the stock price," he explained.

Capital expenditures for memory semiconductors in 2025 are expected to be revised downward. Researcher Park said, "Delays in mass production verification of High Bandwidth Memory (HBM) 3e and weak demand are likely to slow the expansion pace of HBM by memory companies, and the method of expansion will shift from introducing new equipment to utilizing existing DDR4 equipment. Additionally, most NAND capital expenditures will be invested in upgrading existing equipment (process conversion), with very limited investment in new equipment," he forecasted.

Kiwoom Securities projected Wonik IPS's performance for next year with sales increasing by 18% year-on-year to 884.5 billion KRW and operating profit rising by 302% to 72 billion KRW. Researcher Park analyzed, "Although it is weaker than initially expected, it will improve compared to the same period last year. This is because Samsung Electronics and SK Hynix's memory process upgrades will lead to performance improvements in the semiconductor equipment sector, and cost reduction efforts in the display sector are expected to positively impact overall corporate profitability." He added, "However, since the schedule for customers' process upgrades may vary depending on changes in front-end demand, the quarterly earnings volatility of Wonik IPS could increase, which should be kept in mind."

There is a forecast that the momentum for a stock price rebound will strengthen in the first half of next year. Researcher Park said, "The momentum for a stock price rebound of Wonik IPS will strengthen in the first half of next year, when a recovery in the memory semiconductor market is expected. We recommend a strategy of gradually increasing exposure with a long-term perspective."