Korea Investment & Securities selected Eugene Technology as the top pick in the front-end coverage for semiconductor equipment manufacturers. The firm raised its target price from 63,000 won to 72,000 won and suggested a buy investment opinion. On the most recent trading day, 21st, Eugene Technology's closing price was 44,550 won.
On 24th, Research Institute Cha Min-sook noted, "Eugene Technology will see both its top line and bottom line improve as the benefits from DRAM conversion investment expand, along with Eugene Technology's return to profitability and the precursor business entry of its subsidiary, EGTM."
Despite the growth in performance, the company's current stock price is at a valuation burden low at the historical band lower level of price-to-earnings ratio (PER) of 12 times. In the fourth quarter of last year, Eugene Technology recorded a revenue of 114.5 billion won and an operating profit of 31.6 billion won.
Research Institute Cha said, "Operating profit exceeded market expectations by 38%" and explained, "The return to profitability of Eugene Technology's U.S. subsidiary, which was acquired from Axitron in 2017, is estimated to have contributed significantly to the increase in operating profit."
Eugene Technology's subsidiary, which mainly focuses on metal atomic layer deposition (ALD) equipment, continued to record losses after its acquisition but succeeded in returning to profitability starting from the fourth quarter of last year. It also achieved a breakeven point (BEP) on an annual basis.
Research Institute Cha predicted, "As the layers applied by metal ALD increase along with customer company's advanced process transitions, Eugene Technology's sales and profit will continue to grow in the future."
The reason why the company continues to show relatively strong performance compared to competitors is that it has secured all three DRAM companies as clients, thus benefiting greatly from technology transitions. Even for Samsung, transition work from DRAM 1a to 1c across all six fabs is taking place at Hwaseong lines 15, 16, and 17, as well as Pyeongtaek P1, P2, and P3.
Research Institute Cha added, "As the layers where the company's equipment is applied increase when transitioning to advanced DRAM, the market share of the company's equipment within customer lines continues to increase," explaining that "the increase in DRAM capital expenditures (CAPEX) inevitably concentrates the benefits on Eugene Technology."