[Click eStock] "S-1, Second Half Performance Expected to Slow Down Slightly"

Ebest Investment & Securities Issues 'Buy' Rating and 110,000 KRW Target Price... Closing Price on 7th at 86,600 KRW

Photo by Asia Economy DB

[Asia Economy Reporter Geum Bo-ryeong] There is an analysis that S-1's second half performance will be somewhat sluggish.

According to Ebest Investment & Securities on the 8th, S-1's third-quarter sales are estimated to be 539.4 billion KRW, similar to the same period last year, but 3.1% below consensus. Operating profit is expected to be 50.1 billion KRW, up 1.8% from the previous year, but 6.1% below consensus operating profit.

Researcher Kim Se-ryeon of Ebest Investment & Securities explained, "In S-1's security product sales division, captive sales to Samsung Group have somewhat slowed due to COVID-19, and due to a temporary change in the margin mix, the decline in profit relative to sales is expected to be greater. The building management division is also expected to continue experiencing a decline in growth rate as operations decrease in leisure retail facilities such as hotels, and collective facilities such as corporate training centers and education centers due to the impact of COVID-19."

This year, a performance pattern of strong first half and weak second half is inevitable. Although S-1's untact (contactless) business model is gaining attention, the overall sales growth is slowing due to the base effect from the profit surge caused by price increases in the second quarter's affiliate integrated security division and the continued impact of COVID-19.

However, the performance direction is expected to be upward. Researcher Kim said, "S-1's overseas sales ratio is currently minimal, but it has been confirmed that a security contract was signed for the Dhaka International Airport in Bangladesh, recently awarded to Samsung C&T, so overseas sales could significantly increase long-term upon airport completion. Additionally, the expansion of unmanned convenience stores leading to security product sales, and the launch of unmanned parking solutions in collaboration with Kakao Mobility are expanding the base of untact business, so alpha growth potential is also a part worth expecting in the long term."

Ebest Investment & Securities gave S-1 a 'Buy' investment rating with a target price of 110,000 KRW. The closing price on the 7th was 86,600 KRW.