[Market Focus] Seojin System Rises on Growing Profitability Prospects and Overhang Resolution

Seojin System is on an upward trend. This appears to be influenced by securities firms' analyses suggesting a turnaround to profitability in the fourth quarter after hitting a low in the third quarter, as well as the anticipated resolution of the overhang issue.

As of 1:44 p.m. on January 21, Seojin System was trading at 28,950 won, up 450 won (1.40%) from the previous trading day.

Eugene Investment & Securities projected that Seojin System’s sales and operating profit for the fourth quarter of last year would reach 299.1 billion won and 23.1 billion won, respectively, up 13.1% and 2,209.6% year-on-year. Heo Junseo, a researcher at Eugene Investment & Securities, said, “We expect profits to be better than previously estimated due to favorable exchange rates and improved product mix,” adding, “With the third quarter marking the bottom, we anticipate a turnaround to profitability compared to the previous quarter.”

This year’s expected sales and operating profit are 1.5 trillion won and 196.1 billion won, respectively, representing increases of 45.7% and 26,545% year-on-year. He emphasized, “We expect the quarterly trend to be low in the first half and high in the second half,” and explained, “The Fluence order received in November last year is identified as an order for a local plant in the United States, and considering the setup timing and delivery schedule of the North American plant, it is reasonable to expect that revenue recognition will begin in earnest from the second quarter.”

He also predicted that the overhang issue would be resolved. He stated, “We are currently in the process of resolving the put option holdings to restore investor confidence, which is the key reason for the valuation discount,” and explained, “With the turnaround in performance and strong demand in the key business divisions’ end markets, the valuation gap with global EMS companies is expected to narrow.”