SK Securities: Small and Mid-Cap Stocks to Watch After the Presidential Election, Including Saltlux and Lunit

SK Securities stated that, ahead of the presidential election in June, four key commonalities have been identified in the core pledges of major presidential candidates, including the expansion of artificial intelligence (AI) and the defense industry. Based on these themes, the company highlighted Saltlux, Lunit, GNC Energy, Kyungdong Navien, Zinus, Mitech, and Rainbow Robotics as small- and mid-cap stocks to watch.

On May 26, SK Securities researchers Na Seungdoo, Park Chansol, and Heo Seonjae said in their report, "Mid-Small Cap - Small and Mid-Cap Stocks to Watch After the Presidential Election," that "it is time to consider not only short-term investment strategies that simply ride political themes, but also to establish mid- to long-term investment strategies that take into account the direction of the next administration and the broader macroeconomic environment."

First, based on the top 10 pledges announced by the Democratic Party of Korea, the People Power Party, and the Reform Party ahead of the election, they identified four common denominators: ▲ AI and defense ▲ stable and economical energy ▲ recovery of the working-class economy ▲ balanced regional development and regulatory innovation.

Regarding the first commonality, AI, they noted, "In the short term, beneficiaries such as semiconductors are expected to come to the fore, but in the mid- to long-term, attention should shift to software (SW) that utilizes AI," highlighting derivative software such as medical AI, defense AI, and AI security. For the defense sector, they predicted that localization of materials and components, as well as MRO (maintenance, repair, and operations), would become more prominent. As stocks of interest, they suggested Saltlux, Lunit, Sands Lab, Robotis, Alux, and MNC Solution.

On the energy policy front, they stated, "While there are differences of opinion on whether to build an energy infrastructure based on renewable energy such as solar and wind power, or on nuclear power plants and SMRs, there appears to be consensus on the need for a stable and economical energy supply," adding, "This is essential for the expansion of the AI industry." They predicted increased efforts to expand ESS and green hydrogen facilities and to build smart grids, and cited GNC Energy, Kyungdong Navien, BHI, S Energy, and Gridwiz as stocks of interest.

Regarding the recovery of the working-class economy, they diagnosed, "In the process of revitalizing local economies through the recovery of local commercial districts, items that can maximize consumer satisfaction at minimal cost will come to the fore." In particular, they emphasized the need to pay attention to industries and companies related to the expected expansion of safety support throughout the life cycle, including for children, youth, newlyweds, and seniors. Stocks of interest include Zinus, Mitech, Osteonic, Revu Corporation, Nearpharm, Jeximix, and Greedy.

Finally, in the area of balanced regional development and regulatory innovation, they assessed that, in line with global trends, the domestic market for automation, robotics, and AMR is expected to open up. They stated, "The growth of the AI industry and other new growth sectors can be leveraged for balanced regional development," adding, "There also appears to be a strong will for bold regulatory innovation. The removal of regulations or the expansion of special exemptions for new technologies and industries is expected." They also noted the need to pay attention to improvements in transportation infrastructure and tourism products, which are essential for balanced regional development. Stocks of interest include Rainbow Robotics, Yuil Robotics, Dawonsys, Daati AI, and S Traffic.