[Click eStock] Sollid, Excessive Stock Price Decline Is a Buying Opportunity

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 21st that it maintains a buy rating and a target price of 15,000 KRW for Sollied. It was also presented as the top pick within the domestic network equipment sector.

Kim Hong-sik, a researcher at Hana Financial Investment, emphasized, "Due to the recent deterioration in supply and demand in the domestic stock market, excessive price declines have occurred, increasing the price merit," and stated that it should be seen as a buying opportunity.

He added, "The first half of 2021 marked the bottom, showing a gradual recovery in performance, and considering order and sales trends as well as planned amortization of development costs, a notable phase of performance improvement is expected in 2022," further stating, "Exports to the UK and the US, which will have a significant impact on future performance, began around the end of 2021, and this year, the supply of O-RAN (Open Radio Access Network) equipment to overseas telecom companies is becoming likely. Meanwhile, most of the development cost amortization was completed last year, so the effect of performance improvement in 2022 could be significant."

Although Sollied's headquarters recorded an operating profit of 3 billion KRW in the third quarter of 2021, the consolidated results showed an operating loss. This was due to Sollied Labs, a subsidiary responsible for developing O-RAN equipment, recording a large deficit. However, as initially expected, a turnaround to consolidated operating profit is anticipated in the fourth quarter. This is because exports to the UK have started and development costs are expected to be recognized less. Despite the first quarter of 2022 being a seasonal low period, the profit trend is expected to continue. This is due to the expansion of export volumes to the UK and the full reflection of US DAS sales, which were ordered at the end of last year. Sollied, which recorded poor performance in 2021, is expected to show a gradual recovery in performance starting from the end of 2021 and demonstrate meaningful quarterly performance improvements in 2022. Although investment in 5G in-building repeaters by the three domestic telecom companies remains uncertain, exports to the UK and the US will be in full swing, and O-RAN sales will begin.

Researcher Kim said, "Although improved performance has not yet been announced, Sollied's order achievements are better than ever," and predicted, "Orders are expected to soon translate into performance."