Meritz Securities on the 1st said orders for deposition equipment are likely to continue for Sunic System as a Chinese client begins full-scale production of organic light-emitting diodes (OLED). It kept its investment rating at Buy and raised its target price to 71,000 won from 69,000 won. Sunic System's previous session closing price was 46,700 won.
Yang Seung-su of Meritz Securities said third-quarter results this year beat market expectations because the timing of revenue recognition for BOE's 8th-generation deposition equipment, a Chinese display maker, was moved up.
Sunic System's consolidated sales for the third quarter this year were 88.8 billion won, with operating profit of 19.8 billion won. Compared with the same period last year, sales rose 590.4%, and operating profit swung to a profit.
Yang projected the earnings momentum will continue in the fourth quarter. Yang said, "As China's BOE moved up the mass production schedule of the B16 line, revenue recognition for the second deposition tool, which had been expected next year, is likely to be pulled forward to the fourth quarter."
Yang's estimate for fourth-quarter sales this year is 186.8 billion won, with operating profit of 35.6 billion won. Those figures are up 365.3% and 1,019.1%, respectively, from a year earlier.
He also gave a positive view of next year's results on the back of OLEDoS deposition equipment orders. Yang said, "Sunic System holds a de facto monopolistic position with over 90% share in the OLEDoS deposition equipment market," adding, "As OLEDoS is rapidly emerging within China's Augmented Reality (AR) glasses ecosystem in terms of securing manufacturing technology and expense competitiveness, multiple orders are expected."
He added, "In the mid to long term, while its market share in AR glasses may gradually shrink, the share of OLEDoS is expected to remain at a certain level as the market segments into premium, mid-range, and entry-level."