[Click eStock] "Suprema Expected to Sustain Growth Through 2026"

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On November 3, Yuanta Securities analyzed that Suprema is expected to maintain its growth momentum in the fourth quarter of this year and into next year.

Kwon Myungjun, a researcher at Yuanta Securities, stated, "In the third quarter of this year, sales reached 30.35 billion KRW and operating profit amounted to 6.52 billion KRW, representing year-on-year growth of 20.9% and 13.8%, respectively." He added, "While there may be concerns about a quarter-on-quarter decline, a look at the cumulative results for the third quarter shows that the company is still on a growth trajectory."

He further explained, "Cumulative sales for the third quarter were 91.68 billion KRW, and operating profit was 19.78 billion KRW, growing by 24.4% and 34.8%, respectively, compared to the same period last year."

Kwon attributed the slightly weaker-than-expected results compared to consensus to "the unstable situation in the Middle East." Suprema's export ratio is extremely high at 82.9%, and the share of sales from the Middle East and Africa is 16.3%, similar to the domestic share of 17.1%. He predicted, "If the situation in the Middle East stabilizes after the fourth quarter, the delayed sales are likely to recover."

The fourth quarter is the period with the highest annual sales proportion, as it is when domestic public procurement is concentrated. Kwon explained, "Domestic public procurement is focused in the fourth quarter, which will contribute to sales growth," and added, "Economies of scale are continuing as the company expands from access security to integrated security." He also noted, "A favorable exchange rate environment, due to the high export ratio, could lead to improvements in average selling price (ASP) and profitability."

He emphasized, "In the fourth quarter of 2023 and 2024, sales improved by more than 50% compared to the first quarter," and added, "This fourth quarter is also expected to deliver results in line with or exceeding consensus."

Suprema's growth is expected to continue into 2026. Kwon stated, "A comprehensive information security policy is expected to be announced within the year, and if physical security measures are included, this will serve as a domestic growth driver in 2026."

He also explained, "The detailed terms of the Korea-US trade and tariff negotiations have been finalized, and the 350 billion USD investment in the US will be maintained," adding, "This means that domestic companies will continue to expand into North America, and thus, an increase in sales channels is anticipated."

He continued, "The proportion of facial recognition products, which have a high ASP, is steadily increasing," and predicted, "As the preference for contactless solutions continues after the COVID-19 pandemic, the demand for facial recognition will remain strong." He also mentioned, "Expectations for the application of fingerprint recognition technology in foldable iPhones are still valid."

In addition, Kwon noted that entry into AI data centers, new product launches, and the expansion of the smart building market are expected to serve as future growth drivers. He assessed, "Suprema will maintain stable growth over the mid to long term through technological advancement and market diversification."

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