[KOSDAQ STAR] Semiconductor, display boom boost SFA Engineering

In January, foreign investors held a record high of over 500 trillion won ($435 billion) in shares of listed companies in South Korea, according to the Finance Supervisory Service.

Among the top five stocks foreigners have been collecting in the tech-heavy Kosdaq in January was SFA Engineering Corp., a display equipment and logistics equipment maker, which has been enjoying a recent boom in the semiconductor and display sectors.

Foreign investors continued their buying spree for the company. In the last 16 trading days, foreigners were net buyers every day except Jan. 31. 

The share price of the company has gradually increased since Sep. 12, when it closed at 49,900 won. After hitting 73,100 won on Jan. 23, shares in the company closed at 68,500 won on Friday. From Sep. 12 to Friday, the share price of the company had climbed 33.78 percent, while the benchmark Kosdaq had fallen 10 percent.

In the first half of 2016, the company’s stock performance was slower than its competitors, due to continued losses at the semiconductor subsidiary and business portfolio focusing on logistics, according to a report by Shinhan Investment Corp.

However, things have turned around, starting from the third quarter of 2016.

A recovery in semiconductor exports brought its subsidiary SFA Semiconductor, separately listed on the Kosdaq, to normal. SFA Engineering acquired STS Semiconductors in 2015 and renamed it SFA Semiconductors in March 2016.

In addition, the company has received multiple orders to manufacture display equipment. New orders include contracts to make deposition equipment for Hong Kong-based display maker Truly Semiconductors, Chinese organic light-emitting diode maker Visionox and California-based Royole Corp. While building reference in deposition equipment, the company has acquired a controlling stake in display testing equipment maker and OLED evaporator rival SNU Precision in December 2016, a move that help broaden SFA Engineering’s business portfolio.

Analysts said a boom in the semiconductor and display sectors will be likely to continue this year. Record semiconductor exports boosted the country’s exports in January. In the first 10 days of February, outbound shipments of semiconductors saw a 79.4 percent spike on-year. And major display makers such as Samsung Display are set to aggressively investment in developing small and midsized OLEDs, which will boost sales for SFA Engineering.

Korea Investment and Securities Co. and Samsung Securities recently revised up its target price for SFA to 90,000 won, while Shinhan Investment put it at 85,000 won.

The company was first established in 1998 when it was spun off from Samsung Techwin. Listed in 2001 on the Kosdaq, the company first focused on factory automation and logistics system. It soon jumped into manufacturing equipment for Liquid Crystal Display and Plasma Display Panel in early 2000s. Starting from 2008, it produces equipment for OLEDs, solar and fuel cells and semiconductors.

The company’s consolidated sales and operating profit in the last quarter in 2016 will grow 37 percent and 90 percent, respectively, from the previous quarter as SFA‘s clients plan to heavily invest in mobile OLED and large-screen LCD, according to Korea Investment. 

By Park Ga-young (gypark@heraldcorp.com)