FNS Tech

Income statement

Revenue CAGR from FY2021 to FY2025 was about 2.8% a year. The figure hides very large swings in between.

FY2025 pre-tax income was about KRW 10.6 bn and SG&A about KRW 7.1 bn. Net income attributable to controlling shareholders was about KRW 8.6 bn. The rest went to ASAHI LAMP's minority holders.

Commentary. Earnings follow two cycles that overlap.

FY2021–FY2023: Display spending was low after the QD-OLED orders were delivered in 2020. Revenue fell from KRW 91.9 bn in FY2020 to KRW 38.9 bn in FY2023, and margins stayed in single digits. Consumables, then mainly regenerated CMP pads and masks, grew but were too small to offset equipment.

FY2024: Revenue rose 128% as the KRW 13.3 bn Samsung Display contract and other equipment orders were delivered. Gross margin fell to 16.9% because of the equipment-heavy mix. Net income of KRW 14.6 bn was well above operating profit of KRW 8.8 bn because of about KRW 6 bn of non-operating gains and a very low tax charge. It is not a fair base for comparison.

FY2025: This was the turning point. Revenue fell 16.8% as equipment shrank, but operating profit rose 17.5% to KRW 10.3 bn and gross margin widened 6.7 points to 23.6%. ASAHI LAMP was consolidated from Q3 and lamp revenue doubled. Q4 2025 operating margin was 10.9%, held back by year-end costs. The SK Securities March 2026 note gives FY2025 operating profit as KRW 10.5 bn. The quarterly filings add up to KRW 10.3 bn.

H1 2026: Revenue fell 37.1% to KRW 27.0 bn, but operating profit roughly doubled to KRW 7.3 bn, a margin of about 27%. Q1 and Q2 2026 posted the two highest quarterly operating margins in the company's history (27.0% and 26.8%). The trailing-twelve-month figures to June 2026 are revenue KRW 57.7 bn, gross profit KRW 19.4 bn, operating profit KRW 11.8 bn and net income KRW 10.8 bn.

Balance sheet

Commentary. The balance sheet is conservative. The company has been net cash in every year shown. Non-current liabilities rose in FY2024 when the KRW 9.57 bn zero-coupon EB was issued and fell in FY2025 as the bond was reclassified and used, together with cash, to fund the ASAHI LAMP purchase. Net cash fell from KRW 18.5 bn to KRW 9.5 bn mainly because of that acquisition, which cost about KRW 10.9 bn. At 30 June 2026 the liabilities-to-equity ratio was 38.2% (39.3% at end-2025) and the current ratio was 201.8% (198.9%). Total equity of KRW 88 bn at end-2025 includes about KRW 4 bn of non-controlling interest in ASAHI LAMP. That amount will shrink after the July 2026 step-up to about 80%.

Cash flow

Commentary. Operating cash flow has trailed earnings since FY2024 because of working capital. In FY2025 receivables doubled to about KRW 10 bn as consumables and overseas sales grew, and equipment milestone billing took time to unwind. FY2025 investing outflow of KRW 13 bn was mostly the ASAHI LAMP purchase. Routine maintenance capex is modest, at roughly KRW 3 bn a year apart from expansion years. In 2023 the company approved a one-off KRW 12.7 bn facility programme. Financing flows show debt repayment, steadily rising dividends and, in FY2024, the EB proceeds. The company has not bought back shares in the open market. Its capital return in 2026 was the cancellation of treasury shares it already held.

Ratios (SK Securities, company filings)

Commentary. Returns move with the equipment cycle. Excluding the one-off non-operating gains of FY2024, underlying ROE has been in single digits to low teens. The more profitable mix in 2026 lifted trailing ROE to about 10.4% by mid-2026. SK Securities forecast about 18.8% for FY2026E in May 2026 but cut its earnings outlook in October. With net cash and very little interest-bearing debt beyond the zero-coupon EB, interest coverage is not a constraint. Asset turnover is low for a consumables company because of the large PP&E base built for display equipment, at about 40% of total assets.

Management guidance. Management has not given numerical guidance. The 2026 Value-Up Plan is qualitative: more HBM pad share, stable glass-substrate pad production, overseas lamp sales, new display and glass-substrate equipment orders, and entry into industrial automation. In September 2026 management said falling display investment had reduced revenue while the lamp business was lifting profitability.

Consensus expectations. SK Securities is the only source. In May 2026 it forecast FY2026 revenue of KRW 80.1 bn (up 8.8%), operating profit of KRW 19.2 bn (up 86%, 24.0% margin) and EPS of KRW 2,002. On first-half results (operating profit KRW 7.3 bn) and its Q3 forecast (KRW 5.2 bn), the full-year figure depends on a strong Q4. The October target cut points to estimates being reduced toward the mid-teens of billions of won in operating profit.

Bull case

1. Margins have changed for good. Materials and parts were 72% of H1 2026 revenue, with operating margins around 27%. If equipment stays near its low, the group still earns roughly KRW 14 to 20 bn a year in operating profit. On that basis a 12x trailing P/E is low for a consumables company whose peers trade near 21x.

2. HBM and foundry pad expansion. The company has HBM3E/4 qualification in hand, 70% spare pad capacity, a price about 30% below Qnity, and pending foundry evaluations. Each new process step adds high-margin volume with little capex.

3. Glass-substrate option. If glass-core substrates for AI accelerators reach volume from 2027, pads with 5 to 20 times the consumption and 2 to 3 times the ASP, plus a wet-equipment line-up, could make glass substrates larger than the whole current CMP pad business.

Bear case

1. Display losses outweigh consumables gains. Revenue fell 37% in H1 2026. Without new Gen-8.6 IT or foldable OLED orders, fixed costs at the Cheonan and Asan plants weigh on returns, and operating cash flow (KRW 7 bn in FY2025) stays weak.

2. Incumbent response. Qnity's new pad platforms and roughly 80% share limit FNS Tech to a cheaper second source. Pad revenue grew only 9.5% in FY2025, slower than the HBM narrative suggests.

3. Small-cap structure. Thin liquidity, 420,000 EB shares still to come, a single analyst, concentrated control and Taiwan and China exposure justify a lasting discount. The cut in the only target price shows how quickly expectations can be reset.

Key catalysts and monitorables (next 12 months)

Mid-Nov 2026: Catalyst / monitorable: Q3 2026 results: whether operating margin stays at about 27% and materials and parts reach about KRW 13 bn

Q4 2026 – Q1 2027: Catalyst / monitorable: Samsung Display Gen-8.6 IT OLED and foldable OLED equipment orders, which would be disclosed as single sales contracts

H1 2027: Catalyst / monitorable: Glass-substrate CMP pad mass-production qualification, production-facility investment decision, first volume shipments

2026–2027: Catalyst / monitorable: Samsung foundry (10nm to 2nm) CMP pad qualification. HBM4 volume at SK hynix and Samsung

Ongoing: Catalyst / monitorable: ASAHI LAMP Plant 2 ramp-up (capacity about KRW 30 bn) and first UV lamp and CMP pad sales to TSMC

Mar 2027: Catalyst / monitorable: FY2026 business report, dividend decision, update of the Value-Up Plan

Ongoing: Catalyst / monitorable: Further exchanges under the 8th-series EB (420,000 shares at KRW 16,500)

Ongoing: Catalyst / monitorable: Any further treasury-share cancellation or formal shareholder-return policy

Analyst verdict. FNS Tech is now a different company from the display-equipment vendor that listed in 2017, although its market value does not yet reflect that. The 2025 purchase of ASAHI LAMP, for about KRW 11 bn, funded mostly with exchangeable-bond proceeds, has been the most value-creating decision in its history. The subsidiary went from break-even to a margin of about 50% within three quarters, made the group an exporter almost overnight, and gave it access to TSMC and Applied Materials. Combined with HBM-grade CMP pads now shipping and growing cleaning services, the result is a business earning about 27% operating margins on half the revenue base of 2024.

The doubts are about scale and durability. CMP pads are still a business of under KRW 10 bn a year against a well-funded incumbent that keeps launching new pads. Display equipment, which still sets the company's reported revenue, has no visible large orders. The glass-substrate opportunity is real but depends on customer timing the company does not control, as the October target cut shows. Governance and liquidity are typical of a closely held KOSDAQ small cap.

At about KRW 13,000 to 14,000 per share, the market values FNS Tech at roughly 12x trailing earnings and 1.2x book. That price assumes the consumables margins hold and little else. The asymmetry favours patient holders. Further gains need either a qualification event (glass-substrate pad production or Samsung foundry pads) or an equipment order that steadies revenue. Quarterly margins and cash conversion should be watched more closely than revenue. If materials and parts keep growing at around 40% a year with margins of 25% or more, the gap to Korean consumables peers trading near 20x earnings should narrow. If the glass-substrate timeline slips past 2027 and display equipment does not recover, the shares could stay a low-multiple, dividend-paying small cap until the mix shift is complete.