S1 shares and target price jump amid market rout... the power of shareholder returns [Stock NOW]

[Financial News] Yuanta Securities raised its target price for S1 by 33%, from 90,000 won to 120,000 won.
The move reflects improved earnings per share (EPS) resulting from large-scale treasury share cancellations, the company’s shareholder return policy, and the potential for investment in future growth businesses. As South Korea’s stock market continued to plunge, S1 shares instead trended upward, drawing market attention.
On the 16th, Yuanta Securities maintained its “Buy” rating on S1 and raised its target price to 120,000 won. Based on the previous day’s closing price of 97,600 won, the upside potential is about 23%.
S1 shares closed higher even on October 6, when the KOSPI’s sharp decline began in earnest. The shares rose 1.93% from the previous trading day to 84,700 won. They then fell 1.30% on the 7th but gained 0.12% on the 8th, and rose 1.90% and 10.57% on the 12th and 14th, respectively. They surged a further 15.05% on the 15th, reaching 98,600 won and diverging from the recent trend in the stock market.
Lee Chang-young, a researcher at Yuanta Securities, cited large-scale treasury share cancellations as a reason for S1’s stock to be re-rated. The company plans to cancel all 4,188,939 treasury shares it currently holds—about 11% of its issued shares—by November 2026. It also plans to spend 450 billion won to acquire an additional 4,545,454 shares and cancel them by November 2027.
The total number of issued shares is expected to fall by about 23% when the existing and newly acquired shares are combined. “Taking this into account, even if net income remains unchanged, EPS would increase by about 30%, while return on equity (ROE) could rise from the current 11% to around 13–15%, in line with the company’s plan,” the researcher said.
The explanation is that when the number of shares falls, the same profit is distributed among fewer shares, increasing the value per share.
Earnings also provided support. S1’s third-quarter revenue rose 2.6% year on year to 716.7 billion won, while operating profit increased 5.3% to 65.4 billion won. Operating profit came in about 4.3% above the market consensus of 63 billion won. In the security business, new orders, subscriber growth and improved operational efficiency drove the earnings improvement.
Revenue in the infrastructure business declined due in part to delays in starting security system integration (SI) projects. However, Yuanta Securities cited new orders in Samsung Electronics’ semiconductor division, Samsung SDS’s artificial intelligence (AI) data center-related business, airport anti-drone projects, and large-scale defense project wins as factors that could support a recovery.
Future growth businesses were also cited as a factor that could increase corporate value. S1 plans to use the cash remaining after its treasury share purchases, along with future free cash flow (FCF), to invest in robot control and operations, HVAC, automated control installation and operations, and home life-care services for single-person households and seniors.
The researcher forecast that “if the growth potential of future businesses is added to the increase in per-share value resulting from treasury share cancellations, a further re-rating of corporate value is possible.”
[email protected] Kang Jung-mo Reporter