[Click e-Stock] "MNC Solution Expected to Receive Strong Interest from Overseas Defense Companies"

On October 10, KB Securities analyzed that MNC Solution is expected to receive strong interest from overseas defense companies, including those in Europe. The firm maintained its 'Buy' investment rating and raised its target price to 260,000 won.

KB Securities anticipated that MNC Solution will benefit from the expansion of defense facilities in European countries.

Jung Dongik, a researcher at KB Securities, stated, "Due to the aftermath of the Ukraine-Russia war, defense spending by major European countries has increased significantly," adding, "Although European defense companies are expanding their facilities, it is not easy due to the collapse of the defense value chain within Europe."

He further explained, "As a result, MNC Solution, which has the capability to supply core components in large volumes, is expected to emerge as a collaborative partner for overseas defense companies, including those in Europe."

Additionally, the ongoing progress in the sale process is also expected to have a positive impact. Recently, it was reported that Socius Private Equity (Socius PE) and Well to Sea Investment, the largest shareholders of MNC Solution, have distributed investment memorandums (IMs) in preparation for the sale of their stakes.

He emphasized, "Not only existing defense companies but also firms seeking to newly enter the defense sector, as well as financial investors, are expected to show interest. If a company with potential for synergy after the acquisition or growth through additional investment becomes the buyer, or if intense competition for the acquisition drives up the sale price, this is likely to have a positive effect on the stock price."

KB Securities projected that MNC Solution will achieve sales of 88.2 billion won and operating profit of 11.8 billion won in the third quarter of this year. This represents an increase of 40.4% and 77.5%, respectively, compared to the same period last year. He said, "Although sales are expected to decrease quarter-on-quarter due to fewer business days from seasonal factors, profitability is projected to remain at the previous quarter's level thanks to simultaneous increases in both export and domestic mass production sales."

He added, "Given that 80-90% of annual sales come from the existing order backlog and that sales are concentrated in the fourth quarter due to the nature of the business, the annual performance is expected to meet previous estimates."