[Click eStock] "Hansome, No Directional Concerns Despite Social Distancing Level 2"

Shinhan Financial Investment Presents 'Buy' Investment Opinion and Target Price of 41,000 Won... Closing Price on 23rd at 30,100 Won

[Asia Economy Reporter Kum Boryeong] Despite the elevation of social distancing to Level 2 in the Seoul metropolitan area due to the novel coronavirus infection (COVID-19), there is an analysis that there are no concerns about Hansome's direction.

According to Shinhan Financial Investment on the 24th, Hansome's consolidated sales for the fourth quarter are expected to grow by 2.1% compared to the previous year. This is a figure lowered by 3 percentage points from the previously estimated growth rate.

Researcher Park Heejin of Shinhan Financial Investment said, "Considering the sharp decline in mid-August in the past, psychological contraction is inevitable. However, along with the sales trends of department store formats, it appears that the company's fourth-quarter sales showed a mid-single-digit growth rate until mid-November," adding, "Of course, it is necessary to check the sales trends for the last week of November and early December. However, considering the existing store growth trends and recovery periods of major distribution channels during the first and second waves in the past, sales trends are expected to be better than in the second and third quarters."

Although the growth rate has decreased compared to before, there appears to be no major concern. The online growth rate, which accounts for about 20% of sales, is maintaining around 40%. The flagship store The Hansome House, which opened last year, is also targeting an operating profit margin of around 20% in 2023.

Outlook for margin improvement is also positive. Researcher Park said, "The opening of premium outlets in Daejeon and Guri (Space One) in 2020 and the Yeouido Park One store scheduled to open in February 2021, which are channel expansions by group affiliates, will also help secure relative growth within the format," adding, "Considering not only the COVID-19 base effect reflected in the current estimates but also channel expansion during the normalization phase, there is also an expectation for an upward revision of next year's sales growth rate."

Shinhan Financial Investment gave a 'Buy' investment opinion with a target price of 41,000 KRW. The closing price on the 23rd was 30,100 KRW.