[Click-e Stock] "Wonik IPS, Unprecedented Memory Upcycle...Target Price Raised"

On February 26, Meritz Securities maintained its "buy" rating on Wonik IPS, stating that earnings are expected to improve on the back of an unprecedented memory upcycle and the resumption of foundry investments, and raised its target price by more than 60% from 87,000 won to 140,000 won. This implies an upside potential of 22% compared with the closing price of 114,800 won on February 25.

Meritz Securities assessed Wonik IPS's weak fourth-quarter results as a one-off. Fourth-quarter revenue came in at 275.0 billion won, down 7% year-on-year, and operating profit fell 34% to 17.2 billion won, missing the consensus by 46%. However, it analyzed that around 15.0 billion won in one-off expenses, including year-end performance bonuses, were reflected in the quarter, and that excluding these, the results were broadly in line with market expectations.

The brokerage projected that full-fledged profit growth will begin in 2026. Operating profit in 2026 is forecast to reach 181.8 billion won, up 146% from the previous year, and to grow a further 34% to 243.8 billion won in 2027. With investments in new memory fabs (P4, M15X) and conversion investments proceeding simultaneously, it estimated that memory equipment revenue in 2026 will increase by 40%. The resumption of foundry investments by a North American client was also cited as a factor that will expand earnings.

It also viewed the stock as having entered a re-rating phase in terms of valuation. The target price was derived by applying a 2026 price-to-earnings ratio (PER) of 41 times, which is the average for global equipment makers, to the expected 2026 earnings per share (EPS) of 3,347 won.

Although the current share price is trading at 33 times 12-month forward PER and 4.9 times price-to-book ratio (PBR), above its historical band, the firm judged that there is a high likelihood of setting a new upper bound for valuation, given the strength of the memory cycle and the magnitude of profit growth.

Kim Dongkwan, an analyst at Meritz Securities, said, "Considering the unprecedented memory upcycle and the favorable supply-demand environment on the KOSDAQ, differentiated EPS growth will stand out," forecasting that mid- to long-term earnings momentum will continue.