[Click e-Stock] "Solumi, Practical Growth Outlook... Target Price Maintained at 42,000 Won"

On the 13th, Kiwoom Securities maintained a target price of 42,000 KRW and a buy rating for SoluM, forecasting practical growth focused on profitability this year.

SoluM showed steep growth in operating profit of 154.5 billion KRW in 2023, driven by growth in the ESL division. For 2024, solid growth centered on profitability improvement is expected across all business divisions.

In the electronic components division, performance was weak due to market growth slowdown of 3IN1 boards for TVs and power modules for mobile phones, but growth of server power modules and EV fast charger power modules, where new demand is increasing, is expected to accelerate.

Although sales volume is not large, server power modules, which require specification advancement, are expected to experience high growth. The EV charger power module has completed development of a 30kW product and plans to mass-produce a 50kW product. Accordingly, it is expected that market share expansion centered on performance superiority will be possible.

The ICT division still forecasts steady growth of ESL. ESL sales last year are estimated at 803.1 billion KRW. ESL sales this year are expected to reach 933.3 billion KRW, and additional growth is anticipated depending on whether orders from large retail companies are secured within the first half of the year. ESL still has low penetration in retail, offering many growth opportunities, and it is analyzed that SoluM is strengthening its market position through superior customization response compared to competitors.

Recently, the dynamic pricing function, which allows flexible price display changes by integrating AI, has attracted attention, and adoption of additional functions such as inventory management is increasing. The proportion of medium-to-large and color products is also increasing, expanding the role of ESL from a cost-saving function in retail to a core product for retail smartization.

For 2024, sales of 2.1 trillion KRW and operating profit of 158.2 billion KRW are forecasted. This year is expected to show a performance trend of low in the first half and high in the second half. Based on the weak performance in the fourth quarter of last year due to ESL delivery schedules and costs from the new Mexico factory, gradual performance improvement is expected. The stock price is judged to be undervalued with a PER below 10 times based on 2024. Oh Hyun-jin, a researcher at Kiwoom Securities, said, "With gradual performance improvement and additional ESL order momentum, the stock price is also expected to rise."