[Click eStock] "Wonik IPS, Target Price Down 10% Reflecting COVID-19 Impact"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on semiconductor and display equipment supplier Wonik IPS on the 23rd. However, the target price was lowered by 10% from the previous level to 36,000 KRW, reflecting the impact of the novel coronavirus disease (COVID-19).

Kim Kyung-min, a researcher at Hana Financial Investment, said, "There is no sign yet of a decline in Wonik IPS's performance in 2020," adding, "Although last year's results were lower than expected due to SK Hynix's reduced facility investment plans and a slowdown in consumables sales, it is judged that the company has set a conservative business plan for this year." The target sales for Wonik IPS in 2020 are 1 trillion KRW, with an operating profit of 138.7 billion KRW.

Looking at the quarterly sales trend, the first and fourth quarters are expected to be the low points, while the second and third quarters are expected to be the peaks. It is estimated that sales will be 125 billion KRW in Q1, 350 billion KRW in Q2, 368.2 billion KRW in Q3, and 158.6 billion KRW in Q4.

Researcher Kim Kyung-min added, "Although the setup of display equipment for China has been delayed to the second quarter and the end date of equipment supply contracts has been postponed recently, since the contracts themselves have not been canceled, it will not affect the earnings estimates."

The fact that the semiconductor sector is less affected by COVID-19 compared to other industries is also positive for the company. The semiconductor industry is classified as an essential industry in various countries, receiving preferential treatment in terms of production line operation and export customs clearance, so it is expected to be less negatively impacted compared to other sectors.

Furthermore, as Samsung Electronics is striving to strengthen its competitiveness in the semiconductor business sector, Wonik IPS is expected to further elevate its status as a close partner by leading the localization of process equipment.

Researcher Kim Kyung-min explained, "The price-to-earnings ratio (PER) valuation based on market expectations has fallen to 8.1 times in 2020 and 6.5 times in 2021. It is undervalued to the extent that it is close to the bottom of investment sentiment in the semiconductor sector during the trade dispute period in December 2018."

This content was produced with the assistance of AI translation services.