[Click eStock] "Daehyun, Stock Undervalued Despite Clear Business Improvement"

Source: Daehyun, Daishin Securities Research Center

[Asia Economy Reporter Park Ji-hwan] On the 30th, Daishin Securities evaluated that Daehyun's stock price is undervalued compared to its peers despite improvements in the business environment.

Daehyun is a women's clothing brand company. Its main clothing brands include Mozo Espin, Duel, Juke, CC Collect, and Blue Pepe. It has secured 520 distribution channels including domestic department stores and agencies. The main consumer base is women in their 20s to late 30s, and the expected sales proportion by brand this year is Mozo Espin 29%, Juke 22%, Duel 22%, CC Collect 17%, and Blue Pepe 9%.

Researcher Han Kyung-rae of Daishin Securities stated, "Sales rebound and fundamental improvements are expected due to domestic revenge consumption." First-quarter sales are projected to increase by 11.8% year-on-year to 70.1 billion KRW. Operating profit is expected to rise by 85.3% to 5.7 billion KRW, indicating a recovery compared to the same period last year. Researcher Han said, "The proportion of outlets, which have relatively lower sales commission rates among major channels such as department stores and outlets, is expected to increase from the 40% range to 50%, leading to an improvement in profit margins."

Last October, Daehyun launched an integrated online mall and strengthened its online channel by launching the online-exclusive brand ‘Decave’ in March this year. ‘Decave’ is the first online brand, which quickly achieved its first-half goals, and plans to expand the online curated mall in the second half, increasing the number of product models from 20 in the first half to 60 in the second half.

Additionally, there are plans to launch new online brands.

Considering the business environment and performance recovery, the stock price is analyzed to be undervalued. This year's sales are expected to reach 292.4 billion KRW, up 15.5% year-on-year, and operating profit is projected to rise 215.7% to 22.5 billion KRW. Researcher Han emphasized, "The relaxation of social distancing policies in July is also positive for consumer activities," adding, "The expected price-earnings ratio (PER) for this year is around 6.8 times, which is relatively undervalued considering that the clothing brand sector's PER has recovered to around 10 to 11 times due to economic recovery following the easing of COVID-19."