[Click eStock] "Dasan Networks, Subsidiary's Acquisition of Optelian is a Mega-Level Positive Factor"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 18,000 KRW on the 22nd for Dasan Networks, expecting a rise in stock price due to the acquisition of Optelian by its U.S. subsidiary DZS.

Hana Financial Investment viewed DZS's acquisition of Optelian as a major positive factor. On the 20th (local time), Dasan Networks' U.S. subsidiary DZS acquired Optelian, a Canadian optical communication company. Direct equipment supply to tier-1 telecom operators through Optelian is highly likely, marking the biggest achievement since the management change at DZS.

Hong-sik Kim, a researcher at Hana Financial Investment, said, "Over the past 10 years, Dasan Networks has been striving to enter the U.S. telecom market but has not achieved significant results," adding, "It is expected that direct supply to U.S. telecom operators will be possible by the end of this year at the latest, which raises great expectations." Optelian has already received technical certification from U.S. telecom operators, and although minimal, actual test equipment sales have also occurred.

Additionally, Dasan Networks is expected to emerge as a practical beneficiary of the government's Digital New Deal policy, with increasing chances of winning orders in the domestic campus network public Wi-Fi sector.

Hana Financial Investment analyzed that recent concerns among investors due to the on-market sale by major shareholder Dasan Invest are not a significant negative factor. Historically, there have been few cases where telecom and equipment stocks formed price peaks or troughs at the time of major shareholder or executive sales or purchases, and it appears the sales were made for collateral loan repayment and investment purposes. Furthermore, the shareholding ratio of Dasan Invest is expected to rise to 18% through convertible bond (CB) buybacks.

This year's performance is predicted to be somewhat weaker than expected due to increased related costs as DZS expands its business. Researcher Hong-sik Kim explained, "It is extremely difficult for a wired network equipment company to supply directly to tier-1 U.S. telecom operators," and added, "Next year, the company is expected to be evaluated in the market as an upgraded entity."