[Click eStock] "KG Inicis, Expected Record High Quarterly Earnings in Q3... Target Price Up"

[Asia Economy Reporter Park Ji-hwan] Hana Financial Investment maintained a 'Buy' rating on KG Inicis on the 5th, expecting the company to achieve its highest quarterly performance since its founding, and raised the target price to 33,500 KRW.

Choi Jae-ho, a researcher at Hana Financial Investment, analyzed, "3Q sales are expected to be 254.5 billion KRW, and operating profit 27.7 billion KRW, representing increases of 28.6%, and 3.5% year-on-year, respectively," adding, "due to strong subsidiary operations, the quarterly performance growth of KG Eduone and KG Mobilians is expected to continue." The stable profitability of subsidiary Hollys F&B is also expected to continue in the third quarter.

The 3Q operating profit margin (OPM) is forecasted to be 10.9%, down 0.1 percentage points from 2Q, due to expanded transaction volume at new large franchise stores such as Hanssem and Homeplus and a seasonal decrease in transaction unit prices. Researcher Choi said, "The 3Q results are significant as they are expected to achieve the highest performance since the company's founding despite the extension of the domestic social distancing level 4 and the seasonal off-season," adding, "In 4Q this year, the recovery of on-tact franchise transactions such as travel, aviation, and tickets is expected to continue expanding quarterly performance."

Annual sales for this year are projected at 1 trillion KRW, with operating profit at 113.2 billion KRW. The reasons for the strong performance include continuous growth in high-profit franchise transaction volumes such as global, small and medium-sized, and hosting sectors, an expanded base effect from increased on-tact franchise transactions in travel, aviation, and tickets, and improved performance of major subsidiaries.