'Jipkok' Stocks Rise... Furniture, Water Purifiers, etc. Expected to Perform Well in Q3

[Asia Economy Reporter Oh Ju-yeon] Due to the novel coronavirus infection (COVID-19), with increased time spent at home caused by reduced travel and outings and expanded remote work, companies related to interior design such as furniture and water purifiers are expected to show strong performance in the third quarter of this year.

According to financial information firm FnGuide on the 1st, the estimated operating profit for the third quarter of four durable consumer goods companies, as projected by three or more securities firms, is 220.5 billion KRW, an 18.36% increase from 186.3 billion KRW in the same period last year.

The most notable growth is seen in Hanssem. Hanssem posted an operating profit of 7.1 billion KRW in the third quarter last year, but it is expected to increase by 214.5% year-on-year to 22.4 billion KRW this third quarter. The reinstated social distancing level 2 is increasing the time spent at home, which is expected to boost investment in residential environments similar to last March. In the second quarter, Hanssem's interior furniture division sales rose about 20% compared to the same period last year.

Lee Min-jae, a researcher at NH Investment & Securities, explained, "In the third quarter, sales in the interior furniture division are expected to increase by 17% year-on-year," adding, "Due to strong regulations on reconstruction in real estate policies, remodeling demand is also expected to rise, leading to a 20% increase in sales in the Rehouse (RH) division."

Hyundai Livart is also expected to show strong third-quarter results. It posted an operating profit of 6.9 billion KRW in the second quarter last year, but it is projected to increase by 66.5% year-on-year to 11.5 billion KRW in the upcoming third quarter. Hanwha Investment & Securities analyzed that the domestic furniture industry showed structural growth in the first half of this year, with growth rates of 11.2% and 27.8% in the first and second quarters, respectively. This is considered an unusual phenomenon given the limited recovery in consumer spending.

With increased demand for environmental home appliances due to COVID-19, water purifier rental companies are also seeing heightened expectations for improved performance. Samsung Securities researcher Cho Sang-hoon stated, "Interest in personal hygiene is rising, and demand for professional management services has greatly increased," adding, "In a situation where face-to-face sales are limited, the increase in new customers combined with reduced selling and administrative expenses has significantly improved the performance of environmental home appliance rental companies." Accordingly, Coway's third-quarter operating profit is expected to increase by 5.0% year-on-year to 147.2 billion KRW.

Mattress company Zinus, which became an Amazon bestseller in 2015, is expected to benefit from the expansion of the online mattress market in the United States in the third quarter. Zinus's third-quarter operating profit is analyzed to increase by 23.0% year-on-year to 39.4 billion KRW. Shin Seo-jung, a researcher at SK Securities, said, "Currently, Zinus is the only mattress supplier within Walmart stores and is exclusively stocked in over 4,000 Walmart stores across the United States," adding, "Considering that the U.S. online mattress market has maintained a high growth rate of 44.3% annually since 2011, the benefits are expected to continue."