iM Securities analyzed that on the 4th, with earnings improving and net profit increasing for S-1, the company is likely to maintain a dividend payout ratio of around 50%, increasing the possibility of a higher dividends per share (DPS) in the future. The investment opinion remains 'buy' with a target price raised to 88,000 won. The closing price for S-1 on the previous trading day was 72,600 won.
S-1 reported consolidated sales of 732.7 billion won and operating profit of 52.3 billion won for the second quarter of this year, surpassing consensus (market expectations).
Researcher Lee Sang-heon from iM Securities said, "In an environment where earnings are improving and net profit is increasing, it is expected that the company will maintain a dividend payout ratio around 50%, raising the possibility of an increase in DPS in the future."
Looking at S-1's annual dividend payout ratio, the payout ratio was 30.1% in 2016 and has steadily increased to 56% in 2022, 48.2% in 2023, and 51.7% in 2024.
The researcher explained, "After increasing the DPS from the previous 1,250 won to 2,500 won in 2017 and significantly raising the dividend payout ratio, it has maintained a level around 50% each year. It is expected that the company will see increased earnings and net profit, and the dividend payout ratio will likely remain around 50%, raising the possibility of a DPS increase in the future."
Additionally, as the Lee Jae-myung government is expected to establish a fundamental basis for the principled disposal of treasury shares in listed companies and impose reasonable regulations on treasury shares currently held, the expectation for disposal is high for S-1, where the proportion of treasury shares is significant.
The researcher predicted, "In terms of shareholder returns, as shareholder demands for disposal of treasury shares are increasing, it may be possible to expect the disposal of some portion of the 11.0% treasury shares."