KB Securities evaluated the electronic components manufacturing corporation SoluM as a beneficiary in the era of automation on Nov. 11. It revised its investment recommendation to ‘buy’ and set the target price at 25,000 won. On the previous trading day, SoluM closed at 19,560 won.
KB Securities projected that SoluM's revenue and operating profit for next year would increase by 18% and 57%, respectively, compared to the same period last year, reaching 1.9 trillion won and 131.9 billion won.
Lee Chang-min, a researcher at KB Securities, predicted that the revenue from SoluM's main business sector, the electronic shelf label (ESL), would grow, leading to improved profitability. ESL products replace the traditional paper price tags that were previously handled manually in large retail stores. In terms of annual performance for 2023, the ESL sector represents 41.3% of SoluM's total revenue and 83% of its operating profit.
The researcher noted, “The global ESL market is expected to grow at an average annual rate of 14.7% until 2032,” adding, “Despite entering the market relatively late, SoluM is rapidly increasing its market share based on its technological advantage and internalization of the full value chain.”
He stated that last year's deferred revenue is being reflected and the cumulative order amount is increasing, predicting that ESL revenue would grow by 51% year-on-year to 667.2 billion won by 2025.
Additionally, the researcher anticipated that the electronic components business could see gradual performance improvements. He mentioned, “Revenue from low-value adapters in the power module sector is expected to decline, but the share of high-value server and electric vehicle charger segments is increasing, which will enhance profitability.” He added, “In the VS business, the adoption rate of the ‘3-in-1 (integrating power, video board, and tuner onto one board)’ board is rising, and there are expectations for diversification of clients in digital signage.”