Korean Kosdaq-listed small and mid-caps to extend gains on chip and display boom

2017.05.18 14:43:27 | 2017.05.18 15:36:14

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Stocks of South Korea’s display and chip components makers listed in the nation’s secondary Kosdaq market that have enjoyed a rally over the last six months are expected to extend their winning streaks as the recently revived boom in the semiconductor and display industries will likely continue for a while.

According to the nation’s securities exchange operator Korea Exchange (KRX) on Wednesday, Toptec Co., an automated machines manufacturer for panel making plants, posted 44.4 billion won ($39.6 million) in operating profit for the first quarter ended March this year, up 1,189 percent from a year ago and already exceeding that of 42 billion won for full 2016. Its sales reached 305.6 billion won in the quarter, ranking fifth among Kosdaq-listed firms. Its sales on a consolidated basis surged 494.1 percent on year to 305.8 billion won, almost 75 percent of last year’s record high sales of 396.2 billion won.

Display and semiconductor equipment manufacturer SFA Engineering Corp. reported 44.4 billion won in operating profit on a consolidated basis in the first quarter, up 831.7 percent on year. Sales reached 461.5 billion won, up 124.8 percent on year. Its operating profit and sales that had been out of the top 50 in the first quarter last year rose to the sixth and fifth, respectively, in the Kosdaq market.

Sales of an organic light-emitting diode (OLED) equipment maker ICD Co. soared 1,244 percent on year to 117.4 billion won, recording the biggest gain among Kosdaq companies. Its operating profit also returned to black at 13.3 billion won.

Buoyed by such stellar performance, their shares have rallied. Over the past six months, SFA Engineering share price has surged 49 percent and that of Toptec 47 percent.

Market analysts expected that their stocks still have room to grow, citing the recent boom in chip and display markets that is expected to be extended for a while. In particular, shares of the companies with higher earnings growth than their stock growth rate will likely continue to draw interest from investors.

According to Lee Won-sik from Hana Financial Investment, the buoyant mood for panel equipment manufacturers would not stay the same considering panel makers’ organic light-emitting diode (OLED) display investment cycle, but companies showing improvement in earnings per share would be able to grow further.

Shares of Toptec closed Thursday at 27,850 won, down 0.36 percent or 100 won, and those of SFA Engineering finished at 88,900 won, down 1.22 percent or 1,100 won from the previous session. ICD stocks gained 4.04 percent to close at 15,450 won in Seoul trading.

By Lee Yong-gun

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