▶ Recent order trends confirm the growth of the memory business and the easing dependence on Samsung Electronics, which we consider especially favorable for Wonik IPS. As such, we raise our TP from W11,500 to W13,000 to reflect a higher
earnings forecast and target multiple as Wonik IPS should grow into a global semiconductor equipment player. Specifically, we raised our 2014 EPS by 17.1% and applied a 2014 PE of 15.2x, in line with the average of top global CVD makers.
▶ Wonik IPS’ major products are CVD equipment for Samsung’s memory business and dry etchers for LCD displays. In 2H13, sales surged fueled by CVD equipment supplies to Samsung’s Xian V-NAND fab. In 2014, PE CVD supplies for system LSI should gain traction, and Wonik plans to supply to S2 Line (Austin, Texas) and the S3 line (Hwasung). For display equipment, we expect Wonik IPS to benefit from Samsung’s OLED investments in 2H14.
▶ On March 28, Wonik IPS announced equipment orders from Globalfoundries (W16.4bn) and SK Hynix (W6.4bn). System LSI equipment supplied to Samsung will also be shipped to Samsung’s foundry partner, Globalfoundries, to be used at its New
York fab. Of note, this marks Wonik IPS first exports to an overseas buyer. As Samsung and Globalfoundries will cooperate on 14nm FinFET technology, Globalfoundries should use the same technology and process as Samsung, which should lead to higher sales going forward.
▶ We estimate Samsung’s 2014 capex at W24tn, in line YoY. Xian NAND phase 2 investments should begin in 4Q14, and OLED A3 investments should begin in 2H14. As such, Wonik IPS’ quarterly earnings should improve after bottoming in 2Q14
(sales W84.5bn, OP W8.6bn, separate basis). On a full-year basis, we forecast separate sales will grow to W410bn, up 40% YoY, in 2014 and to W486bn, up 18% YoY, in 2015.
*Source: Korea Investment & Securities Co.