Information Security Industry Offering Robust Growth Potential
The author is an analyst of NH Investment & Securities. He can be reached at kyeongkeun.kang@nhqv.com. -- Ed.
Backed by both a changing industry paradigm and a favorable policy environment, the information security sector boasts strong growth potential. Based on: 1) its stable client growth and high contract renewal rate; and 2) its AI-integrated security control system technology, CyberOne is anticipated to secure healthy sales expansion and profitability improvement moving ahead.
Information security industry offering robust growth potential
Established in 2005, CyberOne is a comprehensive information security play. The firm’s main businesses include security control, security consulting, and smart systems, which accounted for 65.2%, 29.0%, and 5.8% of its 2019 sales, respectively.
Backed by both a changing industry paradigm and a favorable policy environment, the information security sector boasts strong growth potential. Over the past nine years, the security control and security consulting markets, CyberOne’s target markets, grew a respective 16.1% and 14.9% pa. Going forward, information security industry expansion is likely to accelerate further, pushed forward by strengthened information security obligations and related investment growth on the passage of the government’s data bills, Digital New Deal policy, and information security industry promotion plans.
Securing basis for stable top-line enhancement via brisk customer growth and contract renewal rates
CyberOne stands as one of five domestic security companies holding all three nationally designated industry licenses (ie, security control, information security service, and personal information impact assessment). Having successfully completed more than 1,600 projects for public, financial, and other institutions, the firm has secured the basis for stable top-line enhancement via its brisk customer growth and contract renewal rates. Over the past four years, the number of clients at CyberOne’s security control business increased by over 20% pa. And, over the same period, its contract renewal rate has exceeded 94%. In addition, thanks to its AI-integrated security control system technology, the firm’s strong profitability improvement should sustain going forward.
We estimate CyberOne’s 2021 sales at W25bn (+20.8% y-y) and OP at W2.6bn (+34.6% y-y; OPM of 10.4%). Based on its IPO price, the company’s 2021E P/E sits at 14.5~15.8x. Combined IPO shares are to number 1.36mn (600,000 new shares, 761,000 existing shares (treasury stock)), with a free-float ratio of 41.7%.