[Click eStock] "S1, a Long-Awaited Buying Opportunity at a Low Point"

[Asia Economy Reporter Ji-hwan Park] Kiwoom Securities maintained a 'Buy' rating on S-1 on the 11th, calling it a rare buying opportunity at a low point. However, the target price was slightly lowered from 113,000 KRW to 107,000 KRW.

Jinseong Ra, a researcher at Kiwoom Securities, stated, "Q4 sales reached 580.8 billion KRW, an 8.6% increase year-on-year, but operating profit recorded 42.5 billion KRW, down 4.8%."

Sales grew 10.2% year-on-year, supported by an increase in customers in the system security division, a rise in order backlog in the product sales division, and year-end budget execution in the building management division.

Researcher Ra explained, "Operating profit decreased 4.8% year-on-year and 13.6% quarter-on-quarter due to a one-time cost of about 7.4 billion KRW related to workforce efficiency." He added, "This one-time labor cost is expected not to occur from this year onward, after 2019." He further noted, "The large-scale new workforce recruitment and efficiency efforts were completed last year, so this year we expect sales growth and profitability improvement."

He also viewed the steady inflow of new customers and stable churn rate management as positive factors. Researcher Ra said, "Customer churn due to the ADT acquisition has not yet appeared," and evaluated, "The CU unmanned convenience stores are currently operating in about 90 stores as of last year. While more store expansion is needed for meaningful performance reflection, it is significant that they are leading unmanned operations."

Researcher Ra stated, "This year, with the removal of additional labor costs, stable growth across all business divisions and profitability improvement are expected," and added, "The system security division is expected to continue growth in the 4-5% range based on stable subscriber increases and churn rates."

This content was produced with the assistance of AI translation services.