[Click eStock] "Solum, Earnings Expected to Improve from Q4 Bottom"

BNK Investment & Securities analyzed on the 17th that SoluM's performance will improve each quarter starting from the fourth quarter as the bottom. The investment opinion 'Buy' and the target price of 29,000 KRW were maintained.

BNK Investment & Securities forecasted that SoluM's sales and operating profit in the fourth quarter will be 325.4 billion KRW and 9.5 billion KRW, respectively, down 31% and 65% from the previous quarter. Minhee Lee, a researcher at BNK Investment & Securities, explained, "This is lower than the FnGuide consensus," adding, "The sales of Electronic Shelf Labels (ESL) are expected to be much lower than anticipated, and the factors reflecting bonuses and year-end expenses are higher than initially expected."

However, they predicted that the fourth quarter will be the bottom, with performance improving until the third quarter of next year. He said, "New orders from large European retailers, which had been in the bidding process, have been consecutively secured, and SoluM's ESL order backlog at the end of the year is expected to reach 2.1 trillion KRW, marking an all-time high

." Comparing this to the order backlog of 1.65 trillion KRW at the end of 2023 and 1.6 trillion KRW at the end of 2022, the order momentum is increasing again, which raises expectations for future performance improvement," he said.

He added, "The global ESL market continues to grow, and SoluM is also progressing with several new orders from large retailers in the US and Europe next year, so the order backlog growth trend is expected to continue."

He emphasized, "Although the performance in the fourth quarter of this year and the first quarter of next year is expected to be lower than previous estimates, the leading indicator of new order growth from large retailers is re-emerging, raising expectations for future performance improvement," and added, "We believe the industry bottom has passed, and we expect a gradual stepwise increase in stock price."