[Click eStock] "E8 Expected to See Significant Performance Improvement This Year... Focus Should Be on Meaningful Growth"

Hanwha Investment & Securities analyzed on June 19 that E8 is expected to see a significant improvement in performance this year. The company did not provide an investment opinion or target price.

E8 is the only domestic company that provides digital twin solutions. It has secured references not only in national projects but also among private companies, giving it a competitive edge in its business. In the first quarter of this year, revenue reached 730 million won, marking a 72.21% increase compared to the same period last year. Operating loss improved by approximately 14.9%, from 3 billion won to 3.6 billion won. Net loss decreased by about 27%, from 4.3 billion won to 3.1 billion won.

Kim So-hye, a researcher at Hanwha Investment & Securities, explained, "This is attributable to the expansion and diversification of clients from a B2G-centered base to a B2B-centered one." She added, "Recently, the business environment has also been changing favorably, with the introduction of digital twin application guidelines for weapon systems in the defense industry, and increased demand for artificial intelligence (AI) optimization for process automation in manufacturing."

Kim predicted that smart buildings and smart cities would serve as two growth engines. She stated, "It appears that the signing of a main contract to provide smart building digital twin solutions to major clients is becoming visible," and added, "As demand for smart building systems to reduce costs increases, orders are also expected to rise."

She continued, "Revenue from the delayed Sejong Smart City project is also expected to be recognized without issue this year. Of the remaining 6.7 billion won in orders, a portion will be recognized this year, with the rest to be reflected sequentially by the year after next." She further noted, "Maintenance revenue of about 10 billion won is also expected to be recognized in stages over time."

She assessed, "Orders for the Busan Smart City project are also likely to materialize in the second half of the year, with revenue from the project expected to be recognized from the end of this year or early next year. The scale of this order is also expected to be similar to that of Sejong."

Kim said, "The company has presented revenue guidance of about 9 billion won for this year," and added, "This figure is considered achievable if the businesses centered on smart buildings and smart cities proceed as planned. Although it is expected to be difficult to reach break-even point (BEP) on an annual basis this year, we believe it is time to focus on the meaningful revenue growth currently being achieved."