[Edaily Reporter PARK MIN ] SKSecurities analyzed on the 10th that WONIK IPS Co.,Ltd. posted an earnings surprise—exceeding market expectations for the third quarter—as the cost-saving effects of fixed costs (profit leverage) resulting from sales growth took effect.

However, the firm noted that a full-scale revaluation (re-rating) will only be possible once concerns regarding the sustainability of investment momentum are alleviated, and consequently lowered its target price from 190,000 won to 120,000 won—a 36.8% downward revision. Based on the previous day’s closing price (67,300 won), the stock has upside potential of 78.3%.

Lee Dong-ju, an analyst at SKSecurities, stated in a report published today, “WONIK IPS Co.,Ltd.’s preliminary third-quarter revenue rose 26% year-over-year to 337.8 billion won, while operating profit surged 142% to 66.7 billion won,” adding, “This exceeded the market consensus for operating profit (59.0 billion won) by 13.6%.”

The full-scale delivery of equipment to SamsungElectronics’ Pyeongtaek Plant 4 (P4) was cited as the reason behind the strong earnings. The analyst emphasized, “Although there was a revenue deferral of approximately 30 billion won related to equipment supplied to the Taylor, Texas, fab, this is expected to be fully accounted for in the fourth quarter without any issues,” adding, “The most notable aspect of the third-quarter results is profitability.”

In fact, the third-quarter operating profit margin, excluding one-time gains, stood at 19.8%, significantly exceeding market expectations (16.4%). The analyst explained, “WONIK IPS Co.,Ltd. has a structure with a heavy fixed-cost burden, as its annual R&D expenses account for around 20% of revenue,” adding, “The profit leverage effect—where the fixed-cost burden per unit decreases as revenue grows—has begun to take full effect.”

The analyst also offered a positive outlook for fourth-quarter earnings. “Fourth-quarter revenue is expected to rise to the 400 billion won range, further strengthening the profit effect from fixed costs,” the analyst said. “Excluding one-time costs, such as performance bonuses typically reflected at year-end, it will be possible to achieve an operating profit margin of over 20%.” He further noted, “Since the market’s expectations for the 2027 annual operating profit margin remain at around 17%, any upward revisions to future earnings estimates will be driven primarily by improvements in profit margins.”

Regarding the target price calculation, the analyst explained, “As the 12-month forward price-to-earnings ratio (P/E ratio) for global equipment peers has been adjusted to 18x and that of domestic peers to the low 10x range, a downward revision of the target multiple was inevitable,” and “We calculated the target price by applying a target P/E ratio of 20.0x to the projected 2027 earnings per share (EPS) of 6,095 won,” he explained.

He assessed, “While a full-scale valuation re-rating will only be possible once concerns regarding the sustainability of client investments beyond 2027 are alleviated, there remains significant room for upward revisions to the earnings of materials, parts, and equipment companies, given the earnings leverage effect, price hikes, and market share expansion,” adding, “We are approaching a phase where downward pressure on multiples is easing and expectations for upward earnings revisions are coming to the fore.”