[Click eStock] "Hansome, Online and Offline Sales Growth... Cosmetics Also Expected" Target Price Up

[Asia Economy Reporter Ji Yeon-jin] DS Investment & Securities announced on the 20th that it maintains a buy rating on Hansome, expecting high growth in online channels and improvement in offline sales due to the recovery of domestic consumption, and raised the target price to 52,000 KRW.

Hansome's online sales are expected to continue growing this year. With differentiated services such as 'Hansome TV' utilizing mobile platforms and StyleLive, which enable real-time communication, stable growth is anticipated.

Online sales this year are expected to reach approximately 276 billion KRW, a 19.7% increase from the previous year, with the sales proportion reaching 21.0%. Since online channels and offline products are operated at the same price, a reduction in selling and administrative expenses due to the expansion of the online sales proportion is expected to create an operating leverage effect. Operating profit this year is estimated at 120.6 billion KRW, an 18.2% increase from the previous year, with the online channel's profit contribution expected to be about 62.0%.

The domestic consumer sentiment index has risen for two consecutive months and surged by 25% compared to the previous year last month. Hansome's sales proportion from department stores is about 60.0%, and with the opening of The Hyundai Seoul by Hyundai Department Store Group last February, offline sales are expected to recover to pre-COVID-19 levels within the year.

Ji-hyun Lee, a researcher at DS Investment & Securities, said, "Regarding the new cosmetics business, premium derma cosmetics are scheduled to be launched in the second half of the year, and considering the synergy effect with Hyundai Department Store's domestic distribution network and VIP customers, there is sufficient growth potential in the domestic premium skincare market." She added, "Since competing fashion companies earned more than 95% of their operating profit from the cosmetics business last year, the company's cosmetics business performance is also expected to be a meaningful factor in valuation."