[Click eStock] "SJ Group, Strong Performance Defying Off-Season... Comfortable Buying Zone"

[Asia Economy Reporter Jihwan Park] Daishin Securities evaluated SJ Group on the 18th, stating that despite the third quarter being an off-season, strong performance is expected, making it a comfortable buying range. They maintained a 'Buy' investment rating and a target price of 36,000 KRW.

Researcher Saerom Lee of Daishin Securities said, "Sales of Kangol brand clothing and bags surged in September," adding, "Strong performance is expected despite the third quarter being an off-season."

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Third-quarter sales are expected to reach 32.8 billion KRW, and operating profit 6 billion KRW, representing increases of 34.4% and 74.9% year-on-year, respectively. Sales by brand are projected to be 18.4 billion KRW for Kangol, 6.9 billion KRW for Kangol Kids, and 7.1 billion KRW for Helen Kaminski. The third-quarter operating profit margin is expected to increase by 4.2 percentage points year-on-year to 18.2%. Despite expenses related to LCDC, stable profit margins are possible due to scale expansion and cost efficiency.

However, the stock price has been undergoing a correction period following a second-quarter earnings surprise, amid concerns over slowing clothing consumption and reduced expectations for China. Researcher Saerom Lee said, "Considering the momentum in 2022, stock price normalization is necessary," adding, "the current stock price is only 8 times the price-to-earnings ratio (PER) based on conservatively estimated earnings for next year."

He also said, "Estimated combined sales for existing brands in 2022 are 176.9 billion KRW, and operating profit 38.4 billion KRW, representing increases of 22.2% and 27.7%, respectively, with a strong fourth-quarter peak season effect expected."