[Click eStock] "Hanssem, One-Time Factors to Be Resolved Starting Next Year"

Due to the raw material price surge issue earlier this year, performance expectations have slightly declined
SK Securities "Maintains Hanssem target price at 150,000 won"

[Asia Economy Reporter Gong Byung-sun] Expectations for Hanssem's performance this year are somewhat declining due to the overlapping issue of a sharp rise in raw material prices. However, Hanssem's home remodeling brand Rehaus continues to grow steadily, and this trend is expected to continue into next year.

On the 12th, SK Securities estimated Hanssem's sales this year to be 2.277 trillion KRW, a 10.1% increase from the previous year, and operating profit to be 105 billion KRW, a 12.2% increase over the same period. These figures are 0.64% and 7.89% below the market consensus forecasts of 2.2917 trillion KRW and 114 billion KRW, respectively.

The decline in performance expectations is interpreted as due to the sharp rise in raw material prices in the first half of this year. At the beginning of this year, prices of wood materials such as 'particleboard,' one of the main raw materials for furniture, surged due to disruptions in logging operations caused by the COVID-19 pandemic. As a result, Hanssem raised prices of products such as beds, desks, and dining tables by an average of 5% in March and April.

However, the Rehaus division appears to be showing strong performance. Shin Seo-jeong, a researcher at SK Securities, explained, "The Rehaus division is leading overall performance and defended profit margins through cost reductions such as selling and administrative expenses. Although the short-term profit margin of the furniture division remains uncertain, the mid- to long-term market share expansion strategy is valid."

From next year, one-off factors are expected to ease. It is anticipated that not only the Rehaus division but also the furniture division will expand market share through store expansion and marketing. In particular, the business-to-business (B2B) sector is expected to see performance growth next year as housing starts increase.

Researcher Shin said, "If strategic changes are added through memorandums of understanding (MOUs) with various companies in the future, mid- to long-term growth potential remains. Attention should be paid to mid- to long-term strategic changes rather than short-term indicators."

Accordingly, SK Securities maintained its investment opinion of 'Buy' on Hanssem and a target stock price of 150,000 KRW. The closing price on the 8th was 102,500 KRW.