[Click eStock] "Sollid with Strong Q1 Performance, It's Time to Rise"

[Asia Economy Reporter Myung-Hwan Lee] Hana Financial Investment announced on the 21st that it maintains a buy rating and a target price of 15,000 KRW for Sollied, recommending it as the top pick within the network equipment sector.

The reasons for the recommendation include ▲ strong earnings forecast for Q1 following a Q4 earnings surprise ▲ robust exports to the US, Japan, and the UK, which were key drivers of growth in 2022 ▲ undervaluation of the stock considering the earnings trend.

Hana Financial Investment analyzed that despite the off-season sales gap and recent semiconductor supply issues, Sollied’s Q1 performance is expected to be better than initially anticipated. The firm forecasts Sollied’s Q1 sales this year to increase by 88% year-on-year to 61.1 billion KRW, with consolidated operating profit turning positive to 4.6 billion KRW compared to the previous year. The mainstay DAS, the new promising O-RAN, and UK repeater sales are showing favorable trends, supporting expectations for improved performance this year.

Hana Financial Investment explained that Sollied’s business conditions are favorable in every aspect. The only remaining risk factor is the delay in repeaters from the three domestic telecom companies, but this is not considered a significant risk. This is because discussions on 5G coverage investment between the three telecom companies and the government are expected to begin after the new government takes office in May. Recently, the Ministry of Science and ICT announced that the 5G repeaters of the three domestic telecom companies number 30,000 units, which is only about 4% compared to LTE repeaters. Based on this, Hana Financial Investment predicts that it is time for the three telecom companies to invest in repeaters.

Researcher Hong-Sik Kim of Hana Financial Investment said, "Although the poor performance of some domestic 5G equipment stocks is holding back Sollied’s stock price rise, the earnings of most domestic 5G equipment companies are expected to improve in Q3 this year," adding, "Considering the stock price already reflects this, the rebound of latecomer 5G equipment stocks will gradually begin in earnest, centered on Sollied, which is already showing clear earnings improvement."