[Click eStock] "Hanssem, Market Expansion Paradoxically Due to Reconstruction Regulations... Target Price Up"

[Asia Economy Reporter Eunmo Koo] KB Securities evaluated Hanssem as experiencing a paradoxical market expansion due to reconstruction regulations and expects structural growth despite a decrease in housing sales volume. The investment opinion was maintained as ‘Buy,’ and the target price was raised to 125,000 KRW.

Jang Moonjun, a researcher at KB Securities, estimated in a report on the 24th that the remodeling market accessible to Hanssem has expanded by 20-30% compared to before due to the government’s strengthened reconstruction regulation policy. Researcher Jang stated, “The reason for recommending a buy despite the potential decrease in housing sales volume in the second half of the year is that if the interior division’s performance recovers in 2020 and long-term growth centered on Rehouse’s performance is added, a meaningful stock re-rating could be possible.”

Hanssem’s consolidated sales for the third quarter of this year are estimated to have reached 489.7 billion KRW, a 19.3% increase compared to the same period last year, and operating profit increased by 214.3% to 22.4 billion KRW, meeting market expectations. Researcher Jang noted, “Although B2B sales are sluggish, the growth trend of online and offline interior channels continues, and Rehouse is showing a steady trend,” adding, “It is noteworthy that Hanssem is expected to show favorable performance even though the third quarter is generally classified as an off-season.” He also estimated the Chinese subsidiary’s operating loss this quarter at 1.5 billion KRW and predicted that the break-even point could be achieved within 2021.

The performance trend of Rehouse is considered more important than short-term results. Researcher Jang analyzed, “This year’s favorable performance is largely due to the unexpected strong performance in the interior division caused by the spread of COVID-19,” and added, “For the strong performance to continue in the future, meaningful growth in Rehouse, not just interior, must be achieved.” He said, “Hanssem is focusing on establishing a quality assurance system for future mass construction of Rehouse,” and added, “As the remodeling market is likely to expand, if mass construction can proceed smoothly, rapid growth will naturally follow.”