Daol Investment & Securities said on the 3rd that VM is expected to see revenue growth through new equipment and benefit from SK hynix's expanded facility investment. It maintained a "buy (BUY)" rating and raised its target price to 72,000 won from 43,000 won. VM's closing price in the previous session was 40,650 won.
Koh Young-min, an analyst at Daol Investment & Securities, said of VM, "In the process of confirming first-quarter results, a rerating driver will be created," adding, "Showing steeper earnings improvement than other materials, parts, and equipment companies, this year's expected price-earnings ratio (PER) is about 14 times, making it still virtually the only equipment maker with a reasonable valuation."
The analyst assessed VM's first-quarter revenue and operating profit this year at 81.8 billion won, up 357% from a year earlier, and 27.3 billion won, up 1,351%.
This performance was analyzed to be driven by new equipment.
The analyst said, "The existing NH and WH equipment could cover even the mid- to low-priced market in the poly etching process," adding, "The newly prepared WS (wafer-level) equipment has better performance than the existing equipment, and its average selling price (ASP) is at least 70% higher."
The analyst added, "With investment in the semiconductor cluster in Yongin, Gyeonggi Province, next year, the effect of entering new processes will occur," and "Earnings growth beyond the effect of the client's investment will unfold."
In particular, the revenue growth through new equipment due to the expansion of conversion investment at existing plants of client SK hynix was also assessed positively.
The analyst said, "SK hynix's M14 and M16 plants have decided to expand investment to convert to next-generation 10-nanometer-class sixth-generation (1c) processes beyond the plan," adding, "Second-quarter revenue is set to increase further this year."