[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities forecasted that Danawa recorded an earnings surprise in the second quarter due to increased PC demand caused by COVID-19 and growth in transactions of home appliances and general products, and expects the performance increase to continue in the third quarter.
On the 25th, NH Investment & Securities projected Danawa's sales for the third quarter of this year to reach 32.7 billion KRW, up 11.6% year-on-year, and operating profit to increase by 34.5% to 8 billion KRW. Although the performance outlook for the second half is somewhat lowered compared to the first half due to the special demand for PCs for remote work and online education, recent Danawa traffic and growth rates in key categories (such as home appliances) are maintaining a favorable trend.
Affiliate shopping (price comparison), which accounts for 34% of separate sales, had a composition ratio of 74% for PCs and home appliances and 26% for general products (outdoor, sports, food, etc.) as of the first half of this year, with the share of general products advancing significantly. Danawa Auto currently has a DAU of about 60,000, with traffic growing 30% year-on-year. This healthy category expansion is evaluated positively.
The growth in scale and profit margin of subsidiary Danawa Computer is also noteworthy. Although there was a one-time sale (to the army) in Q4 2019, it is analyzed that a similar sales level is expected to be achieved annually this year. NH Investment & Securities expects Danawa Computer's operating profit to grow by more than 50% year-on-year this year.
They also analyzed that this year marks the point when the operating leverage effect will fully materialize.
Researcher Baek Joon-gi stated, "We are revising upward the consolidated sales forecast to 144.1 billion KRW and operating profit to 36 billion KRW this year," adding, "It is an internet platform company with a price-to-earnings ratio (PER) of only 13.9 times based on 2020, and the expected dividend yield this year is also 1.6%, showing dividend attractiveness compared to other internet companies."
He continued, "Considering that the operating leverage effect is becoming visible, we still judge the investment attractiveness to be high," and evaluated, "In particular, the high growth of high-margin business sectors such as information usage fee sales (big data sales) is also contributing to improving profit margins."
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