Semiconductors, with Hyungnim running, Audo also starts... Parts-related stocks 'stir'

[Asia Economy Reporter Oh Ju-yeon] The KOSPI has broken through the 2700 mark, continuously hitting record highs, but the rise in semiconductor component-related stocks, centered on Samsung Electronics and SK Hynix, has not matched the increase of large-cap stocks. However, attention is drawn as these stocks are attempting to rise, with earnings expected to increase in the fourth quarter of this year and the first quarter of next year.

According to financial information firm FnGuide on the 8th, among the nine companies classified under semiconductors and related equipment excluding Samsung Electronics and SK Hynix, eight companies except one are expected to see operating profits increase in the first quarter of next year compared to the previous year. Considering that equipment investment by Samsung Electronics and SK Hynix will expand from next year, it is analyzed that performance improvement will become more visible from next year rather than the fourth quarter of this year.

Among the companies expected to improve earnings in the first quarter of next year, the company with the highest operating profit growth rate is Eugene Technology, a semiconductor equipment manufacturing specialist. The operating profit of Eugene Technology for the first quarter of next year, estimated by three or more securities firms, is expected to increase by about 5099% from 300 million KRW in the first quarter of this year to 17.1 billion KRW. Eugene Technology has been recognized as a domestic manufacturer that can replace Japanese products in the materials, parts, and equipment (SoBuJang) sector. Baek Hyun-gi, a researcher at Samsung Securities, analyzed, "Most of the items Eugene Technology competes in are markets dominated by Japanese companies, but domestic demand is gradually strengthening."

The stock price rose to 34,900 KRW on the 24th of last month but fell to 31,700 KRW as of the closing price on the 7th; however, it fluctuated again with a 3% intraday increase on that day.

Wonik IPS and Wonik QnC are also expected to have operating profit growth rates of 206% and 125%, respectively, in the first quarter of next year.

Wonik IPS is projected to see a 65% increase in memory semiconductor equipment demand from its main customers next year compared to this year, recording sales of 620 billion KRW and operating profit of 276.8 billion KRW. Lee Jae-yoon, a researcher at Eugene Investment & Securities, explained, "Demand for memory semiconductor capital expenditure (Capex) is expected to continue a sharp upward reversal in 2021 following the low point in 2019 and 2020. In particular, they have succeeded in domestic production of Metal CVD equipment, which was monopolized by Japan's TEL until recently, and are expected to further expand their market share."

Silicon Works, which sells key semiconductor components for flat-panel displays, is also expected to see earnings of 17.3 billion KRW in the first quarter of next year, a 48% increase compared to the same period last year. However, the stock price rose from 45,850 KRW as of the closing price on November 2 to 51,000 KRW as of 10:25 AM on that day, which did not match the index's rise rate.

Jung Won-seok, a researcher at Hi Investment & Securities, said, "Considering that the company is expected to record consecutive record-high earnings from 2020 to 2021 through customer and product diversification and holds net cash assets worth 150 to 200 billion KRW, applying a valuation multiple at the past average level seems reasonable. The current stock price is undervalued, and the gap between earnings and stock price is large, making this a good buying opportunity."

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