South Korean semiconductor equipment maker Wonik IPS has been flying high, riding on the boom in the semiconductor boom.

According to Seoul-based market data provider FnGuide, Wonik IPS’s operating profit for the second quarter ended June is estimated to have been a record-high of 42.1 billion won ($37.4 million). Sales and operating profit for full 2017 are also expected to reach 581.1 billion won and 123.1 billion won, respectively, versus 244.1 billion won and 28.7 billion won last year, according to the data provider. Market analysts forecast the corresponding figures could go higher to 660.8 billion won and 144 billion won next year.

The equipment supplier has been benefiting from the spike in demand that led the world’s two largest memory chipmakers to make record facility investment to ramp up capacity.

Wonik IPS, separated from Wonik Holdings in April 2016, runs two mainstay operations. Its semiconductor business manufactures plasma-enhanced chemical vapor deposition (PECVD) and atomic layer deposition (ALD) equipment, while display business is responsible for supplying in-factory delivery equipment. As of last year, sales from its semiconductor business accounted for 70.6 percent of its entire sales while display business for the remainder.

A wide range of product lineups is the hallmark of this company compared to other semiconductor equipment makers in Korea, making it well positioned to benefit from Samsung Electronics` capex increase in chip-making in 3D NAND flash and System LSI as well as OLED panels.

Investors are also confident about Wonik IPS’s technologies, as the company has spent 10 percent of revenue on R&D, a very high level compared to its competitors whose average R&D spending is a mere 1.5 percent.

A risk factor is the company’s excessive reliance on Samsung Electronics, but it aims to diversify customers to ensure stable growth in the future.

Its stocks have gained more than 30 percent so far this year, hitting new 52-week highs. The shares ended Thursday up 1.9 percent at 35,650.

Although its stock price rose sharply this year, there is still more room to rise, market analysts said as it remains undervalued against global semiconductor equipment makers. The company’s price-to-earnings ratio (PER) is 14.4 times based on this year’s estimated earnings, which is lower than those of global semiconductor equipment makers - Tokyo Electron (17.1 times), LAM Research (15.1 times) and Applied Materials (16.2 times).

By Yoon Jin-ho

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