Is 'Jusung's' Fall from Grace the Apex of the KOSDAQ's Concentration?

Semiconductor Surge: Ju-Sung Engineering's Rapid Rise

Ju-Sung Engineering has soared from its initial position as the 57th largest company by market cap on KOSDAQ to the 2nd spot, surpassing EcoPro within just 9 months. However, its operating profit last year stood at only 31.3 billion KRW, and the company even posted a loss during the first half of this year. With semiconductor-related stocks dominating the top spots on KOSDAQ, it has become necessary to reevaluate the discrepancy between market value and actual performance.

In May, Lee Jae-Man, Global Investment Analysis Director at Hana Financial Investment, highlighted SK Hynix's potential market cap overtake of Samsung Electronics as a warning sign of market overheating during a bull run. He drew attention to the fact that growth expectations for specific companies have become so high that they can even alter the market cap rankings. Similarly, Ju-Sung Engineering's sudden rise has prompted a closer examination of how future performance expectations are reflected in a company's market value.

The Rise of 'Juseongjeonha': A Semiconductor Stock Surge

Scaling the Ranks

On October 1st, during intraday trading, Jusung Engineering surpassed Ecocar and claimed the second spot in the KOSDAQ market capitalization rankings. At that time, its market cap reached an impressive $11.22 billion. As investor expectations for semiconductor equipment stocks soared, a new nickname, 'Juseongjeonha', emerged among traders.

A Sector-Wide Surge

Jusung Engineering's ascent is not an isolated incident. On the first trading day of the year, not a single semiconductor-related stock was among the top 10 KOSDAQ companies by market cap. However, by early October, this number had risen to six. As of September 19th, according to data from the Korea Exchange (KRX), four semiconductor stocks—Jusung Engineering, Eotech, Wonik IPS, and Rino Industrial—were included in the top 10.

Dominance in the Top 30

Expanding the scope to the top 30 KOSDAQ companies, semiconductor-related stocks account for 17, maintaining the same level as earlier this month. While some stocks have slipped in the top ranks, over half of the KOSDAQ's top 30 companies by market cap are now semiconductor-related.

Wall Street's Take on Ju-Sung Engineering's Performance

Ju-Sung Engineering closed at KRW 209,500 per share on September 19th, with a market capitalization of KRW 9.74 trillion, securing the 4th position. This marks a decrease of approximately KRW 1.49 trillion compared to its intraday high of KRW 11.23 trillion earlier this month.

The driving force behind the stock's rise was not the current performance but rather the anticipation of a future surge in semiconductor equipment demand. SK hynix's expansion of production facilities, coupled with increased capital expenditure by Chinese memory manufacturers and the growing demand for next-generation atomic layer deposition (ALD) equipment, presents new order opportunities for Ju-Sung Engineering.

As semiconductor processes become more intricate, the importance of high-performance deposition equipment grows, leading to a heightened evaluation of the company's technological competitiveness. However, it is important to note that there is a time lag between customer capital expenditure and the actual delivery of equipment and subsequent profit increase.

Divergent Forecasts Amid 10x Growth Expectations... Even Assuming Tesla Supplies

Despite posting an operating loss of KRW 5.6 billion in the first half of this year, securities firms are predicting a significant turnaround for Ju-Sung Engineering by 2028. LS Securities, in its August report, forecasts an operating profit of KRW 316.4 billion for that year, nearly ten times last year's earnings. This projection is based on the expansion of semiconductor equipment sales and a reduction in fixed cost burdens, which is expected to boost the operating profit margin to 40.1%.

Diverging Views on 2028 Profitability: A Wall Street Perspective

While BNK Investment & Securities presented a more conservative estimate of $178 million in operating profit and a 24.6% operating margin for 2028 in June, LS Investment's report paints a significantly rosier picture. The two securities firms' projected operating profits differ by approximately $1.8 billion, a substantial gap.

Despite the differing assumptions and timelines of the reports, the wide variance in expected profitability for the same company in 2028 is notable.


LS Investment's report goes beyond semiconductor equipment, assigning a value of approximately $36.6 billion to the company's solar energy business. This valuation includes an assumption that Joo Sung Engineering will supply all the equipment needed for Tesla's estimated future expansion of solar energy production capacity. It's important to note that this is an estimated business opportunity reflected in the company's valuation, rather than a confirmed contract.

BNK Investment & Securities acknowledges the growth potential but maintains a 'Hold' rating due to valuation concerns. The target price of $1,900 at the time is lower than the closing price of $2,095 on the 19th.

Market Capitalization Leads, but Performance Gap Persists

While both securities firms highlight the growth potential driven by the expansion of semiconductor capital expenditures, their differing assessments of expected order sizes and profitability have led to a significant divergence in their 2028 operating income forecasts.

Market Cap Surpasses, but Performance Disparity Remains

The recognition of Jusung Engineering's market capitalization as the second-highest on KOSDAQ, trailing only Alteogen, signifies a notable acknowledgment of its corporate value. However, a comparison of their respective performances reveals a substantial disparity in the revenue bases currently secured by these two enterprises.

Alteogen's operating profit for the previous year amounted to KRW 1,069 billion, surpassing three times that of Jusung Engineering's KRW 313 billion. In the first half of this year, Alteogen's operating profit reached KRW 735 billion, while Jusung Engineering recorded an operating loss of KRW 56 billion, further widening the gap.

This divergence continues in the 2028 operating profit forecasts. The securities firm consensus for Alteogen stands at KRW 5,785 billion, approximately 1.8 times higher than LS Securities' forecast of KRW 3,164 billion for Jusung Engineering. With the commencement of MSD's Keytruda Curex commercialization, Alteogen anticipates revenue tied to sales performance. In contrast, Jusung Engineering must translate the increased demand stemming from expanded semiconductor capital expenditures into actual equipment orders and profit growth.

Assessing the Rise of Semiconductor Stocks and Biotech Players

While it is challenging to directly compare the enterprise value of novel drug technology transfer companies with semiconductor equipment manufacturers solely based on their operating income, given their distinct business models, Joo Sung Engineering is recognized for its next-generation deposition technology and potential for expanding its global customer base. As expectations for its growth prospects are already reflected in its market capitalization, future performance will become increasingly important in substantiating its value.

The ascent of Joo Sung Engineering from its 57th position at the start of the year to the 2nd spot in market capitalization within 9 months underscores the market's expectations for KOSDAQ semiconductor stocks. While it has since slipped to the 4th position on the 19th, the persistent trend of semiconductor-related stocks comprising 17 out of the top 30 companies remains unchanged. Whether Joo Sung Engineering's rapid rise marks the pinnacle of the semiconductor materials and parts sector's concentration is still uncertain. Future contract awards and profit growth will determine the extent to which the company can justify its elevated enterprise value and, consequently, shape market assessments.