[Click eStock] "Seojin System, Will Rest in Q2 but Growth Potential Remains"

SK Securities analyzed on the 2nd that Seojin System's sales will decrease in the second quarter, but the growth potential is significant as full-scale mass production of electric vehicle battery cases is imminent. The investment opinion 'Buy' and the target stock price of 25,500 KRW were maintained.

Na Seung-du, a researcher at SK Securities, said, "The second quarter is expected to be a period of taking a step back," adding, "The direction, growth potential, and rationale of Seojin System's business remain completely intact, but some confirmed external factors are presumed to have negatively impacted the second-quarter performance."

He anticipated that the ESS business affected by secondary battery supply, telecommunications equipment, and one-time costs would have a negative impact in the second quarter. Researcher Na stated, "There is concern that the global customer, which currently accounts for the largest portion of sales in the ESS sector, may not have secured enough secondary battery volume required for ESS production," adding, "This will lead to a short-term decrease in revenue recognition, but it also indicates that global demand for ESS is rapidly increasing." He continued, "Since this is deferred revenue rather than lost revenue, expectations for the ESS sector in the second half remain strong."

He evaluated, "Global investment in 5G telecommunications equipment is still sluggish, so there may be a transitional period," and "There were one-time costs incurred during last year's electric vehicle battery case production process, and since it is just before entering the mass production system, there is a possibility of additional costs."

However, Researcher Na emphasized that the growth potential of Seojin System's electric vehicle battery cases is very large. He said, "Profit margin changes may occur due to changes in the sales ratio by major business sectors and one-time costs," but stressed, "This is a time when continuous attention is needed because the growth potential of the upstream industries is greater than that of any other companies."