Yuanta Securities Korea noted on the 4th that although the domestic economy is slowing, demand for security is increasing, and security is more important than the economy. They recommended a 'buy' rating and set a target price of 80,000 won. The closing price of S-1 the previous day was 58,500 won.
S-1's sales in the fourth quarter of last year amounted to 763.5 billion won, a 10% increase compared to the same period the previous year. Operating profit recorded 47.9 billion won, a 14% increase from the same period the previous year.
Lee Chang-young, a researcher at Yuanta Securities Korea, said, 'Despite the unfavorable domestic economic and consumption situation, the number of new physical security subscribers for S-1 has been increasing every quarter.' He added, 'Due to the efficiency of building management costs in high-rise buildings, S-1 is increasing its managed area at an average annual growth rate of 5.7%, which is higher than the growth rate of buildings over 10,000 square meters in the country, which is 3.2%.'
He continued, 'In the fourth quarter of last year, the security systems integration (SI) business, which showed high growth, is experiencing a structural increase in demand unrelated to the economy, mainly due to the increase of intelligent CCTV replacing personnel in military bases and hazardous material manufacturing facilities.' He also forecast that the infrastructure service sector would maintain its growth trend this year.
The recent increase in accidents involving the leakage of personal footage has led to a rise in demand for CCTV security. The growing need for safety management related to industrial accidents, such as the Serious Accidents Punishment Act, is also expected to have a positive impact moving forward. This researcher also noted, 'Additionally, the increase in serious crimes in residential areas has led to a rising demand for home security systems, while the increase in deepfake crimes is enhancing facial recognition solutions, leading to continued growth in demand for the company's products and solutions this year.'
Last year, S-1's dividends per share were 2,700 won (dividend payout ratio 52%, yield 4.3%). This reflects a high return on equity compared to the market average. This researcher mentioned, 'Currently, the utilization of the 830 billion won in cash, which accounts for about 37% of S-1's market capitalization, is expected to enhance additional value creation.'