[Click e-Stock] "AJ Networks Entering Phase of Fundamental Improvement... Breakout from Trading Range Expected"

On December 29, Shinhan Investment Corp. analyzed that AJ Networks is entering a phase of fundamental improvement, making it a time when the company is expected to break out of its trading range. The firm initiated coverage with a "Buy" rating and set a new target price of 6,500 won.

Shinhan Investment Corp. expects AJ Networks, as a B2B rental service provider, to recover its performance mainly through its aerial equipment and pallet rental businesses. Choi Minki, a researcher at Shinhan Investment Corp., stated, "While the dividend momentum will drive the stock price for now, considering the fundamental improvement, investors do not need to take too short-term a view," adding, "In the long term, attention should also be paid to the growth potential of the robot rental business, leveraging the company’s experience in logistics rental and its A/S distribution network."

He projected next year’s revenue and operating profit at 1.1011 trillion won and 81.2 billion won, respectively, representing increases of 3.7% and 31.11% year-on-year. He commented, "This year’s results are expected to be sluggish due to a decline in the industrial safety equipment (aerial equipment) and B&T Solution (IT equipment rental) businesses, as well as the base effect from the sale of subsidiaries. However, overall profit improvement in the rental business is expected to lead to better results next year."

He explained, "Logis (pallet rental) is expected to see improved profitability as depreciation burdens ease, and with a recovery in cargo volume compared to last year’s weak domestic demand, top-line growth is also anticipated. For industrial safety equipment, the resumption of Samsung Electronics’ semiconductor expansion investment is expected to improve utilization rates and increase the proportion of high-margin rentals, leading to simultaneous improvements in both revenue and profitability."