[Featured Stock] Pungwon Precision, Target Price 43,000 KRW Amid Explosive Profit Growth... Korea's Only FMM Mass Production

[Asia Economy Reporter Hyungsoo Park] Pungwon Precision is showing strong performance. The stock price appears to be influenced by the expectation that sales will increase significantly starting from the fourth quarter of this year as mass production of FMM (Fine Metal Mask, a component used to deposit organic light-emitting materials onto substrates in displays) begins.

At 10:41 AM on the 22nd, Pungwon Precision was trading at 17,950 KRW, up 17.32% from the previous trading day.

Hana Securities stated that the first half of this year was a period for FMM yield and OLED panel application, and they expect testing for mass production to proceed in the second half of the year.

Choi Jae-ho, a researcher at Hana Securities, explained, "Pungwon Precision is the only domestic company capable of mass-producing FMM," adding, "FMM sales are expected to be reflected starting next year."

He continued, "Through 8th generation FMM, the product range is expanding to include OLED panels used in IT devices," and "FMM, which will be applied from new smartphone models to meet the dual customer demand, is scheduled to be applied to smartphone models launching in the first half of next year."

Pungwon Precision's FMM sales are expected to surge from 200 million KRW last year to 24.6 billion KRW this year, and 103.1 billion KRW next year. During the same period, profit margins are anticipated to rise from 7.3% to 20.5%, and 31.9%. With the mass production of parts used in smartphones starting in earnest from the end of this year, significant growth is expected, and the investment opinion 'Buy' and target price of 43,000 KRW are maintained.

Pungwon Precision is estimated to achieve consolidated sales of 86.3 billion KRW and operating profit of 16.8 billion KRW this year. These figures represent increases of 107.0% and 441.9%, respectively, compared to last year. Next year, sales are expected to reach 182.4 billion KRW and operating profit 58.1 billion KRW.

Researcher Choi said, "Based on the expected 2023 performance, Pungwon Precision is undervalued with a price-to-earnings ratio (PER) of 8 times," and explained, "Due to increased delivery volumes requested by customers, mass production will begin in earnest from the fourth quarter after the third quarter of this year."

Researcher Choi analyzed, "Although the stagnation of the display industry’s growth is a major risk factor, the reason for the high growth forecast for OLED is the restructuring of the large display market towards OLED," and "The premium OLED TV market share in Europe has already rapidly surpassed LCD, and large OLED panel expansion is being considered, so OLED panel shipments are expected to continue high growth in the future."

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