[Click eStock] Sinseong ENG, Performance Decline Due to Investment Delays... Target Price Lowered

Kiwoom Securities lowered the target price for Sinsung ENG from 2,800 KRW to 1,800 KRW on the 3rd, citing poor performance. The closing price of Sinsung ENG on the 2nd was 1,184 KRW. However, the investment rating was maintained as a buy.

Kim Hak-jun, a researcher at Kiwoom Securities, stated in a report released that day, "The poor performance of Sinsung ENG is largely due to the impact of the downstream industries," and added, "The semiconductor and secondary battery investments, which were expected to be reflected last year, were generally delayed, affecting the performance, and the increased costs also contributed to the poor results."

The reason for maintaining the buy rating was explained as, "Although the impact of delays from customers in the CE division may continue for some time, the order flow is expected to improve from the end of the second quarter, which could be reflected in next year's performance expectations."

Sinsung ENG's fourth-quarter sales are forecasted to decrease by 9.4% year-on-year to 152.9 billion KRW, and operating profit is expected to plunge by 66.8% to 1.4 billion KRW. Researcher Kim Hak-jun explained, "The poor performance continuing from the second quarter is expected to persist into the fourth quarter due to delays in projects already ordered caused by the sluggish downstream industries," and added, "Excluding the 7 billion KRW in sales recognition deferred from the third quarter, sales performance similar to that of the third quarter is expected."

However, at the beginning of the third quarter this year, some orders that were delayed, mainly from certain customers depending on the situation of the downstream industries, are expected to be secured. Accordingly, the performance is expected to show a pattern of being weaker in the first half and improving in the second half.

The RE division is expected to continue showing performance improvement this year due to the progress of EPC projects. Researcher Kim Hak-jun stated, "As large projects are expected to increase, the profit trend is likely to continue with an expansion of EPC sales, which have higher profit margins, rather than solar modules with lower profit margins due to price declines," and added, "Sales of the RE division are expected to recover to around 75 billion KRW this year, breaking away from the poor performance trend that continued until last year."