Shinhan Investment Corp. announced on August 4 that it has reduced its target price for CMTX from 200,000 won to 120,000 won, a 40% decrease, reflecting the weak KOSDAQ market and declining investor sentiment in the semiconductor sector. However, the firm maintained a 'buy' rating, anticipating continued growth in the second half of the year.
Choi Seung-hwan, a researcher at Shinhan Investment, stated, "The company continues to grow each quarter as previously projected, but market valuation expectations have diminished. While the target price has been lowered, the current stock price is about 30% discounted compared to peer companies, trading at a forward price-to-earnings ratio (PER) of 9 times, which supports our buy perspective."
CMTX reported second-quarter revenues of 47.9 billion won and an operating profit of 15.6 billion won, marking increases of 18.6% and 13.8%, respectively, compared to the same period last year. The operating profit margin stood at 32.5%, aligning closely with Shinhan Investment's previous estimates.
The slight decline in operating profit margin year-on-year is attributed to increased costs from equipment investments and hiring before and after the company's listing. However, it is expected that these cost burdens will gradually be offset by revenue growth, leading to improved operating profit margins in the second half of the year and for the full year.
Shinhan Investment forecasts that growth will accelerate in the latter half of the year, as production items for major clients in Taiwan increase and new client registrations continue, projecting quarterly revenue growth to persist into next year.
As semiconductor production facilities expand their capacity, the overall growth in the semiconductor materials sector is expected to continue. CMTX is uniquely positioned as the only supplier to all ten major semiconductor production facilities worldwide, including those in South Korea and abroad, indicating a differentiated growth trajectory.
Choi emphasized, "Our outlook remains unchanged that operating profit will exceed 100 billion won in 2027, highlighting the need to focus on mid- to long-term performance growth rather than short-term market conditions."
* This article has been translated by AI.
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