BNK Investment & Securities on the 27th said Jusung Engineering's valuation has reached a level that is too burdensome relative to its earnings. It lowered its investment opinion to Hold from Buy. The target price was raised to 120,000 won to reflect recent positives. Jusung Engineering's previous closing price was 123,900 won.
Jusung Engineering's share price has risen since the start of the year in line with order moves by clients. The stock, which was 30,450 won on Jan. 2, increased 306% to 123,900 won.
Lee Min-hee, an analyst at BNK Investment & Securities, said, "Recently, the stock surged on expectations for solar equipment exports from the spillover benefits of the U.S.-China dispute," and noted, "However, considering the increase in market capitalization, this appears to be reflected in the share price." The analyst added that the valuation has reached a level that is too burdensome relative to earnings.
Due to a decrease in the order backlog last year, earnings were projected to be sluggish in the first quarter of this year as well. BNK Investment & Securities forecast Jusung Engineering's first-quarter results at 50.7 billion won in revenue and a 2.5 billion won operating loss. Revenue would be down 58% from a year earlier.
However, order activity was seen recovering from the second quarter. The analyst said, "Changxin Memory Technologies is showing order moves related to new fab investments, and new equipment orders from SK hynix's M15X are expected," adding, "Earnings will improve toward the second half, but meaningful results are expected to be reflected next year."