[Click eStock] Hats, Front Market Conditions Improve... "Stable Performance Expected to Continue"

[Asia Economy Reporter Hyunseok Yoo] Yuanta Securities analyzed on the 24th that Hatz is expected to maintain stable performance due to improvements in the upstream market conditions. No investment opinion or target price was provided.

Hatz was established in 1998 and listed on the KOSDAQ market in 2003. Its main business is manufacturing and selling kitchen appliances (residential range hoods, built-in appliances, ventilation systems, air purifiers, etc.).

Yuanta Securities forecasted that Hatz will benefit from increased sales as demand in the upstream market expands (such as improvement in the housing sales market, increased housing supply, expanded housing transactions, and revitalization of the remodeling market). Hatz has shown a characteristic of sales growth with a time lag of 6 to 20 months after the expansion of housing permits, so there is higher expectation for sales growth not only in 2021 but also in 2022.

Jinhyung Park, a researcher at Yuanta Securities, estimated that "Hatz recorded about 56% market share in the range hood market as of last year," adding, "Due to product diversification (launching products at various price points) and competitors’ bankruptcies, market dominance is expected to strengthen further. In particular, attention should be paid to the nationwide distribution network establishment through expanded dealership sales and the strategy to strengthen distribution channels such as B2G/B2C."

He explained, "In line with legal revisions and the need for changes in indoor ventilation methods, Hatz is providing integrated indoor air quality management solutions," and added, "Sales of various products such as ventilation air purifiers and AQM home appliances are expected to continue expanding. Since it owns the only dedicated air quality analysis lab in Korea, there is also great expectation for growth in new businesses."

Yuanta Securities projected that Hatz’s sales and operating profit this year will reach 139.8 billion KRW and 10.6 billion KRW, respectively, representing increases of 11.8% and 33.2% compared to the previous year. He emphasized, "Sales growth is expected to be driven by strong kitchen appliance sales, and accordingly, the operating profit margin is also expected to improve."