"S-1 Recovers from One-Off Expense, Returns to Normal Track... Target Price Maintained" [Click eJongmok]

Stable Growth in Security and Building Management
Security SI Business Expected to Recover in the Second Half
Continued Shareholder Returns with Dividend Payout Ratio Maintained at 50-60%

S-1 Corporation is reported by securities analysts to have returned to a normalized earnings trajectory in the second quarter of this year.

According to Heungkuk Securities on August 5, analyst Hwang Sungjin stated the previous day, "S-1's second-quarter operating profit reached 64.4 billion won, fully recovering the decline in profit from the first quarter, which was due to a one-time expense related to a change in the calculation standard of retirement benefits." He maintained a "Buy" investment rating and a target price of 95,000 won.

Robust Security and Building Management... Portfolio Expansion into AI and Safety

In the second quarter, S-1 posted revenue of 723.1 billion won (down 1.3% from the same period last year) and operating profit of 64.4 billion won (up 4.5%), in line with market expectations. The second-quarter operating margin was 8.9%, surpassing the average level of 8%.

By business division, the security segment led stable growth. Security division sales reached 353.2 billion won (up 0.7% year-on-year). The expansion of the portfolio centered on large clients and the steady net increase in physical security subscribers drove the strong performance.

Analyst Hwang explained, "Going forward, the company plans to sustain profit-driven growth through advanced AI-based intelligent services and by expanding the portfolio from security and video to include fire safety and other safety domains."

The infrastructure division posted sales of 366.1 billion won (down 3.3% year-on-year), showing negative growth. This was due to a delay in recognizing revenue from battery plant orders, which kept security system integration (SI) sales at just 63.6 billion won, a decrease of 25.9%.

Semiconductor and Data Center Investments Expected in the Second Half... Continued Stable Dividend Appeal

However, earnings recovery is expected to become more apparent in the second half of the year. Analyst Hwang noted, "Related projects are anticipated as semiconductor and data center investments are planned for the second half, and bids such as for the GOP scientific border system for the military are also scheduled, so a gradual recovery can be expected."

On building management and integrated security businesses, he emphasized, "An increase in new contracts for sites such as Sampyo SP Tower, A1 Tower Dangsan, and City Center Tower is leading to stable performance in building management and integrated security, including group manpower security."

The company's shareholder return policy and mid- to long-term growth potential are also being rated positively. In March, S-1 announced a plan to enhance corporate value, stating its intention to maintain a dividend payout ratio of 50-60% this year. Last year, the dividend per share (DPS) was approximately 3,200 won.

Analyst Hwang added, "The growth trend based on a stable business structure deserves attention," and added, "The company is expanding its business domain with new products and services based on AI and robotics technology and is continuously investing in new businesses and technology acquisition to support mid- to long-term growth."

This content was produced with the assistance of AI translation services.