The author is an analyst for NH Investment & Securities. He can be reached at esshim@nhqv.com -- Ed.
GnBS Eco is a manufacturer of eco-friendly equipment, including plasma scrubbers for use in the production of semiconductors, displays, and solar panels. We foresee the materialization of a steep earnings growth curve in line with the expansion of downstream investment.
Eco-friendly equipment manufacturer
GnBS Eco’s main products are plasma scrubbers for use in the treatment of toxic gases released in the manufacturing of semiconductors, displays, and solar panels. In addition, the firm has developed and distributed multiple treatment devices for toxic waste materials from industrial sites, including De-Nox (nitrous oxide treatment), white smoke extractors, and powder traps.
Engaging in sustained R&D; orders expanding
GnBS Eco’s flagship plasma scrubber is attracting market attention as a next-generation solution thanks to: 1) its higher treatment temperature compared to previous burn & wet scrubber systems, which allows for treatment of a greater range of gases; and 2) its larger treatment capacity. In addition, taking advantage of its plasma and powder trap technologies, it has developed a wastewater-free scrubber system in a bid for broader market entry.
Although its semicon-related sales portion has been high, sales to solar power clients exceeded sales to semicon players last year, backed by greater global solar power investment. This year, we expect strong orders and earnings growth, thanks to continued active investment at Indian and Chinese solar firms.
We expect GnBS Eco to set new earnings highs this year with 2024 sales of W130bn (+45.5% y-y) and OP of W29.9bn (+63.5% y-y; OPM of 23.0%). Anticipating: 1) stronger orders from solar power clients; and 2) customer portfolio expansion and greater orders from existing clients in the semicon and display industries, we believe that GnBS Eco will enjoy steepening earnings growth (y-y) in 2024. Currently trading at a 2024E P/E of 7.3x, the shares look undervalued relative to the firm’s growth potential.