SIMMTECH, a manufacturer of semiconductor printed circuit boards (PCBs), posted a third-quarter (July–September) earnings shock, shaking investor confidence. The company released results that fell below half of the guidance presented just three months earlier, and with repeated convertible bond (CB) supply and an executive share sale added on, some say the stock has struggled to gain traction despite the semiconductor boom.
According to the Financial Supervisory Service's electronic disclosure system (Dart) on the 12th, SIMMTECH disclosed on the 7th that it recorded third-quarter sales of 372.8 billion won and operating profit of 12.4 billion won this year. Sales rose 14.8% from a year earlier, and operating profit swung to a surplus.
However, as operating profit came to about 50% of the company's outlook, the stock plunged 13% the day after the earnings release. In Aug., SIMMTECH guided third-quarter (July–September) operating profit of 23.2 billion won, but the actual result was 12.4 billion won, less than half.
With the outlook presented just three months earlier cut in half, concerns over earnings guidance grew, and as the prepriced expectations faded, the stock trended lower. SIMMTECH shares fell 17.75% this month (Nov. 3–11). During the same period, Daeduck Electronics and Korea Circuit, grouped as PCB-related stocks, rose 27.8% and 15.7%, respectively, showing a divergent trend. Over the same period, the KOSDAQ index fell 1.79%.
Investor sentiment on the fourth-quarter earnings outlook is also chilly. The company guided fourth-quarter sales of 378.5 billion won and operating profit of 16.3 billion won. Although slightly improved from the third quarter, some say it is hard to be confident about actual achievement as guidance credibility has been shaken.
The burden from repeated convertible bond supply is also weighing on the stock. SIMMTECH issued the fourth CB worth 100 billion won in Mar. last year, and the converted bond shares were additionally listed 26 times from July through early this month. As of the end of June this year, it is about 13% of the total number of issued shares.
In addition, 1,613,756 shares from the fourth CB are set for additional listings three times on Nov. 14, 21, and 24. The conversion price of the CB is 21,194 won, about 60% lower than the previous day's closing price (51,900 won). Coupled with existing converted shares, profit-taking sales could emerge and act as selling pressure.
An executive share-sale issue is also cited as a factor dampening investor sentiment. On the 10th, SIMMTECH Executive Vice President Jeong Chang-bo sold 5,000 shares he held in the open market at 64,000 won per share. In the market, as executive stock sales are generally read as a "peak signal," they could act as a short-term drag on the share price.
A company official said, "Most of the fourth CB supply that had been weighing on the stock has been absorbed," and added, "The remaining supply will have a limited impact on the market."
Earlier, SIMMTECH Holdings (33.6% equity), the largest shareholder of SIMMTECH, acquired the fourth convertible bond (CB) worth 33 billion won and bond with warrants (BW) worth 6.6 billion won that SIMMTECH had held, through a call option. This is a measure to enhance management efficiency and strengthen control over the subsidiary SIMMTECH.
SIMMTECH said, "Contrary to investor concerns, the supply in question will not be immediately released into the market," adding, "If a major shareholder sells holdings, there is a prior disclosure obligation, so the chance of sudden supply hitting the market is low."
Meanwhile, despite the third-quarter earnings shock, securities firms are raising their views on SIMMTECH. Analysts say there is significant upside potential, as sales of next-generation artificial intelligence (AI) memory substrates are expected to ramp up from the first half of next year.
Lee Geon-jae, an analyst at IBK Securities, said, "We see this week's sharp drop as a one-off adjustment after entering an upcycle and believe it should be used as a buying opportunity," adding, "Opportunities for expanding sales of AI memory substrates such as SoCAMM2 and GDDR7 in 2026 are becoming even clearer," as he raised the target price to 63,000 won.
Founded in 1987, SIMMTECH is a manufacturer of semiconductor printed circuit boards (PCBs) and a global-level PCB specialist with production bases in Korea, China, and Japan. It has production capabilities to serve a variety of product categories, including servers, mobile devices, PCs, and wearables. Its major customers are memory companies and non-memory chip design firms.