[Featured Stock] 5G Uptrend Centered on Seojin System, Including KM Double U and Ace Tech
[Asia Economy Reporter Lee Seon-ae] 5G-related stocks are on the rise.
As of 9:19 AM on the 18th, Seojin System is trading at 45,500 KRW, up 2.71% from the previous day. It rose to 45,900 KRW in early trading. KMw and Dasan Networks are also showing slight gains of 0.81% and 0.835%, respectively. Ace Tech, Solid, and Innowireless are also up by 1.10%, 0.99%, and 0.50%, respectively.
This increase is interpreted as driven by expectations of growing demand for 5G.
In particular, Seojin System appears to be attracting investor interest due to forecasts that it will benefit from the resumption of investments in the telecommunications sector and increased demand for semiconductor equipment.
On this day, SK Securities raised Seojin System's target stock price to 51,000 KRW and maintained a buy rating.
Na Seung-doo, a researcher at SK Securities, stated, "Considering that the average 12-month price-to-earnings ratio (PER) of leading domestic telecommunications equipment companies is about 22 to 23 times, we judge that Seojin System is still undervalued," adding, "Since last September, when large overseas orders for domestic telecommunications equipment companies were announced, Seojin System's PER rose to about 20 times, so the current level is not burdensome."
It is also analyzed that with the resumption of investments in 5G communication services, which were delayed due to the spread of COVID-19, Seojin System's telecommunications equipment segment will re-enter a normal growth trajectory. Additionally, recovery in the energy storage system (ESS) industry and external growth due to diversification of clients are also expected.
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Researcher Na explained, "Especially, the sales growth in other segments will be significant," adding, "Due to the trade dispute between the U.S. and China, the shift of manufacturers out of China and the reflective benefits to Vietnam are expected to become prominent starting this year."
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