Eugene Technology：DRAM equipment demand growth, UBS upgrades target price

Overview

This report evaluates the investment opportunity for Eugene Technology as a leading provider of DRAM equipment within South Korea. UBS highlights the company's position to benefit from ongoing capital expenditure plans at major clients such as Samsung and SK Hynix, and from rising DRAM equipment demand. The report upgrades both 2027E and 2028E revenue and EPS forecasts, and raises the target price to 182,000 WON.

Core views

UBS notes that DRAM equipment spending is set to grow for several years, driven by increasing AI memory demand and the advancement of manufacturing processes to smaller nodes. Eugene Tech, which derives over 90% of its equipment sales from DRAM applications, is well-positioned to capture a growing share of the market, with client concentrations at key companies such as Samsung and SK Hynix expected to expand. The report forecasts revenue growth of 40% and 23% for 2027E and 2028E, respectively, and raises EPS forecasts to 6,491 and 8,572 WON. Despite the company's share price having gained 60% this year, UBS maintains a buy rating, believing that current valuations have not fully priced in the strong growth potential of the DRAM equipment market and the expected expansion of the company's market share. Additionally, UBS highlights that Eugene Tech's market share in multiple product segments, including ALD, LPVCD, and Plasma, is on the rise, particularly in large-format PEALD tools and Plasma Enhanced Chemical Vapor Deposition (PECVD) equipment. These positive factors are not yet fully reflected in the stock price, supporting the report's continued buy stance.

Analysis framework

The report conducts its analysis using an industry-driven供需 framework, informed by industry spending trends and changes in client capital expenditure plans. First, it uses industry data and historical performance to forecast future revenue and profit growth. Second, it assesses the alignment of the company's product portfolio with market demand, emphasizing the contribution of growth in high-end DRAM equipment to revenue. Finally, it applies a Price to Earnings (PE) multiples approach to value the company, assigning a 28x 2027E PE based on its high client concentration. This analytical approach demonstrates the application of the supply and demand framework: when demand for equipment from suppliers is driven by capital expenditure plans from downstream clients, analysts must evaluate whether the growth in demand can translate into actual orders and revenue growth. The report also employs a free cash flow analysis to assess the company's intrinsic value, incorporating its capital expenditure plans to determine long-term profitability.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply and Demand Framework

  The industry is fundamentally driven by demand-side growth, particularly for DRAM equipment

  An increase in demand for DRAM equipment leads to corresponding growth in orders and revenue for equipment suppliers, which is a common analytical logic in the semiconductor equipment industry

• Company Fundamental and Financial FrameworkFree cash flow analysis

  Evaluating company intrinsic value through its future free cash flows

  The report forecasts free cash flows for Eugene Tech over the coming years and assesses its long-term profitability based on its capital expenditure plans

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Eugene Technology (084370.KQ)

  Benefiting from growth in DRAM equipment spending

  Strengths

  High market share in DRAM equipment, with strong competitive advantages in ALD, LPVCD, and Plasma tools

  Weaknesses

  Heavily reliant on major clients (Samsung and SK Hynix); changes in client demand could lead to performance volatility

  Comparison

  Compared to other semiconductor equipment companies, Eugene Tech's focus on the DRAM sector positions it for higher growth potential

  Risks

  Uncertainty in client capital expenditure plans may affect the company's future orders and revenue

Key data

• 2027E Revenue Growth Rate40%2 percentage points higher than the previous forecast
• 2027E EPS Forecast6,491 WON3.3% higher than the previous forecast
• Target Price182,000 WONAn increase of 7.1% from the previous target of 170,000 WON
• Current Share Price119,800 WONAs of June 2, 2026

Impact & implications

UBS believes that as a primary supplier of DRAM equipment, Eugene Tech will benefit from capital expenditure plans from major clients such as Samsung and SK Hynix. The company's revenue and profits are expected to see significant growth over the coming years, especially in high-end DRAM equipment. However, any unexpected changes in client capital expenditure plans could pose a risk to the company's earnings forecasts.

Risks

• Uncertainty in client capital expenditure plans may lead to downgrades in earnings forecasts
• If DRAM market demand exceeds expectations, it could positively impact company performance

What to watch

• Progress of Samsung and SK Hynix DRAM equipment procurement plans
• Growth in demand for high-end DRAM equipment