Published 19 Apr.2020 08:00(KST)
[Asia Economy Reporter Park Jihwan] NH Investment & Securities diagnosed on the 19th that S-1 will inevitably experience a slowdown in the growth of net subscribers due to the impact of the novel coronavirus infection (COVID-19). Accordingly, while maintaining the investment opinion of 'Buy,' the target stock price was lowered by 15.52% from the previous 116,000 KRW to 98,000 KRW.
Park Kwangsam, a researcher at NH Investment & Securities, forecasted, "Although S-1 will inevitably see a slowdown in the growth of net subscribers this year due to the impact of COVID-19, the growth rate will quickly recover after the situation eases."
Researcher Park Kwangsam predicted, "S-1's first-quarter sales will increase by 2.8% year-on-year to 504.1 billion KRW, while operating profit will decrease by 3.9% to 44.2 billion KRW, falling short of market expectations."
System security is expected to see a slowdown in net subscriber growth from March due to the spread of COVID-19 impact, with the number of retained customers in the first quarter estimated at 807,000 cases and sales at 268.2 billion KRW. Product sales are predicted to increase by 1.6% year-on-year to 59.4 billion KRW, despite seasonal off-season and delays in overseas projects, due to strong sales of products other than security solutions. During the same period, building management services are estimated to record sales of 127.4 billion KRW, up 2.3%, supported by an increase in office facility area.
Researcher Park stated, "It is judged that the number of retained customers will steadily increase in the mid to long term by maintaining existing customers and signing memorandums of understanding with various companies," adding, "The investment stance of affiliates is expected to be maintained, and despite delays in overseas project product sales, the introduction of thermal cameras and facial recognition systems (CLES) in Korea is increasing, which is expected to lead to stable growth in product sales revenue."
He added, "Building management services will also see an increase in orders for non-affiliated companies due to the activation of the REITs (Real Estate Investment Trusts) market," and "The fact that the company holds approximately 430 billion KRW in net cash with no financial risk is also positive."