[Market Feature] VM Hits Record High on Expectations of Earnings Improvement with SK Hynix Partnership

VM is showing strong performance in early trading.

As of 10:20 a.m. on September 4, VM was trading at 14,110 won, up 7.30% (960 won) from the previous day. During the session, the price soared to 14,250 won, setting a new 52-week high.

Investor sentiment appears to have been boosted by expectations of improved earnings for VM, as the company has resumed its partnership with SK Hynix. Previously, VM signed a single sales and supply contract worth 9 billion won for semiconductor manufacturing equipment with SK Hynix last month. The contract size is equivalent to 12.81% of last year's sales. The contract period runs until October 31.

In the second quarter, VM reported sales of 39.2 billion won (up 98.7% year-on-year) and operating profit of 4.4 billion won (up 1,501.2%). While sales exceeded market estimates by 1.2%, operating profit fell short by 28.3%. Park Sangwook, a researcher at Shin Young Securities, stated, "Although equipment sales were recognized as planned due to the resumption of SK Hynix's investments, there were deferred costs from the period when SK Hynix reduced its equipment purchases between 2023 and 2024, which led to underperformance at VM." He added, "All one-off costs will be fully reflected by the second quarter of 2025, so no additional costs are expected moving forward."

VM is the only domestic company specializing in etching equipment. Etching is an essential semiconductor process that removes all areas except for the circuit pattern after photolithography. Park noted, "The company posted operating losses over the past two years due to reduced investments from its main customer, but is expected to see improved results from the first half of 2025 as SK Hynix increases its investment in general-purpose DRAM capacity." He further predicted, "From the fourth quarter of 2025, as sales of equipment for the M15X line are fully recognized, the company will see rapid earnings growth."

The target price remains at 18,000 won, with a 'Buy' investment rating maintained.