Interior Leader Hanssem, Overcoming COVID-19 and Taking a High Kick

[Asia Economy Reporter Koh Hyung-kwang] The stock price of Hanssem, the leader in the interior design market, is soaring sharply. As the time spent at home increased due to the novel coronavirus infection (COVID-19), interest in interior design has grown, and with the government's real estate regulations leading to increased remodeling demand, it is analyzed that this has resulted in improved performance.

According to the Korea Exchange on the 15th, Hanssem closed at 117,500 KRW on the KOSPI market the previous day, up 4.4% from the previous trading day. This is the highest price in over two years and two months since April 26, 2018 (120,000 KRW). Since the beginning of this month, there have only been two days of decline out of 10 trading days. During this period, it rose 36.3%. Compared to the stock price of 46,000 KRW on March 23, when it hit a yearly low due to the COVID-19 impact, it surged an astonishing 155% in less than four months.

The sharp rise in Hanssem's stock price is largely due to an 'earnings surprise' that exceeded market expectations. Hanssem recently announced that its second-quarter sales increased by 25.9% year-on-year to 517.2 billion KRW, and operating profit rose 172.3% to 23 billion KRW. Foreign investors and institutions have led the stock price increase by net buying 24.6 billion KRW and 48 billion KRW respectively from March 23 until the previous day.

Lee Min-jae, a researcher at NH Investment & Securities, explained, "Hanssem's external environment is becoming positive due to strong regulations on reconstruction and expanded telecommuting caused by COVID-19," adding, "The core business division RH (Rehouse, Hanssem's remodeling business that provides total solutions by packaging interior materials) is improving faster than initially expected through active conversion of affiliated stores to dealerships, a win-win structure between existing store owners and headquarters, and growth in scale through various channels."

Hanssem's future performance outlook is also bright. Chae Sang-wook, a researcher at Hana Financial Investment, said, "Performance growth is appearing as the industry benefits from COVID-19 and the slowdown in reconstruction, along with Hanssem's internal capability enhancement," and added, "Since there was no easing of reconstruction regulations in the recent July 10 real estate policy, the increase in aging houses is expected to expand the reform market, which will lead to performance growth for Hanssem, the leader in the interior design market."