[Click e-Stock] "Sunic System to Rebound in 2Q After Weak 1Q"

Reflecting Sales from 8.6-Generation Deposition Equipment Delivered to BOE in China
Rising Expectations for Additional Customer Orders

Sunic System is expected to see a sharp recovery in performance starting from the second quarter, as the company has begun full-scale delivery of OLED deposition equipment and other devices to its Chinese clients.

On May 23, Meritz Securities maintained its "Buy" investment rating for Sunic System based on this outlook. Although the target price was lowered by 4.4% to 65,000 won, the current share price, which already reflects concerns, is now considered to be entering a high return segment relative to risk. The previous day's closing price was 37,150 won.

In the first quarter of this year, Sunic System posted consolidated sales of 15.9 billion won and an operating loss of 1.8 billion won. Compared to the same period last year, sales declined by 7.3%, and the size of the loss increased.

However, a full-fledged rebound in performance is expected to begin from the second quarter. It has been reported that, starting May 20, the company began delivering 8.6-generation deposition equipment to BOE in China, which was ordered last year. With these results reflected from the second quarter, sales are projected to surge to 214.8 billion won and operating profit to 42.6 billion won.

The company also does not see the delay in equipment orders from Chinese display maker Visionox as a major issue. Sunic System's share price has declined by 28.1% from its annual high due to this issue, resulting in sluggish performance. This reflects concerns that, if there are no additional orders for 8.6-generation deposition equipment this year, growth in next year's performance may be limited.

Meritz Securities predicted that Sunic System will secure an order for Phase 2 deposition equipment from its existing client, BOE in China, within this year. The reasoning is that BOE is receiving subsidies from local Chinese governments, and since the clients for Phase 1 and Phase 2 are different, there is sufficient justification to proceed early with investment in 8.6-generation equipment for the domestic market. Additionally, the continued sluggishness in the mobile business of North American clients was cited as another reason for BOE to focus on expanding IT OLED production.

The possibility of securing orders from panel makers other than BOE also remains valid. Yang Seungsoo, a researcher at Meritz Securities, explained, "Sunic System's equipment is ahead of Japanese competitors in both technology and price competitiveness, making it highly likely to become the standard equipment in the 8.6-generation market. The potential for a gradual expansion of orders remains a key investment point; it is only a matter of time."