[Click eStock] "Device ENG, Currently the Most Undervalued Equipment Company"

[Asia Economy Reporter Eunmo Koo] Korea Investment & Securities has evaluated Device ENG as the most undervalued equipment company currently, expecting it to record its highest-ever performance this year.

According to Korea Investment & Securities on the 6th, Device ENG's order backlog at the end of last year was 65.8 billion KRW, and considering that over 80% of the total equipment orders announced from January to April amounting to 117.2 billion KRW (104 billion KRW for display, 13.2 billion KRW for semiconductors) will be recognized as sales this year, both sales and operating profit are estimated to reach record highs this year.

The display equipment is entirely mask cleaning equipment for organic light-emitting diode (OLED) destined for China, achieving a 100% market share since the second half of last year. Jeonghwan Kim, a researcher at Korea Investment & Securities, explained in a report on the same day, "The latest equipment, which minimizes environmental safety concerns (environmental regulations and use of volatile cleaning chemicals) that local panel companies worry about, is being adopted for new OLED line investments." He also anticipated that Samsung Display's flexible OLED new investment early next year will keep the order situation favorable through next year.

The analysis suggests that the advancement of equipment will create business opportunities. Researcher Kim stated, "Based on the increased market share, next-generation OLED mask cleaning equipment is expected to be newly adopted by Chinese and domestic display panel companies from 2021, and eco-friendly cleaning chemicals supplied in collaboration with 3M are anticipated." He added, "Although the expected material sales amount has not been disclosed, sales could start as early as 2022." Furthermore, "Semiconductor FOUP (wafer storage container) cleaning equipment is expected to benefit from Samsung Electronics' non-memory semiconductor investments, as the number of processes increases in non-memory semiconductor investments, making the unit order size up to twice that of memory semiconductors."

Based on the expected net profit this year (around 20 billion KRW), the current stock price is analyzed to be undervalued at a price-to-earnings ratio (PER) of about 5 times. Researcher Kim said, "Despite the clear increase in market share and unit price of Device ENG's OLED equipment this year, the market has not reflected this in the valuation." He added, "Net profit is expected to increase about fourfold compared to the previous year, indicating performance momentum, and in the mid-to-long term, if the cleaning chemical business becomes visible, a revaluation as a materials company is also expected."

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