[Click eStock] 3Q Slump Hyundai Livart... "Must Show Growth Potential in New Business"

Operating profit 4 billion won... Half of last year
"Active pursuit of total interior market needed"

Hyundai Livart Smart Work Center Exterior (Provided by Hyundai Livart)

[Asia Economy Reporter Minwoo Lee] Hyundai Livart posted somewhat sluggish results in the third quarter of this year. Although sales grew, operating profit is estimated to have decreased by more than half compared to the same period last year due to significant investment costs. Analysts suggest that growth potential must be demonstrated through new businesses such as kitchen furniture and total interior.

On the 18th, Cape Investment & Securities lowered Hyundai Livart's target price by 17.4% to 19,000 KRW, citing these reasons. The closing price the previous day was 15,650 KRW. The investment opinion of 'Buy' was maintained.

Hyundai Livart recorded consolidated sales of 350.7 billion KRW and operating profit of 4 billion KRW in the third quarter of this year. Sales increased by 8.9% year-on-year, but operating profit decreased by 54.8%. This was due to the heavy cost burden compared to sales growth. Hyundai Livart completed a logistics center in June last year, which increased annual depreciation expenses by about 3 billion KRW, and labor costs also rose due to the opening of new stores.

By business segment, among B2C furniture, kitchen furniture sales increased by 30.6% due to the expansion of the interior business, while home furniture online sales increased by 7.6%, but overall decreased by about 3%. B2B furniture sales grew only in the office segment by 3.8%, while built-in and ship furniture decreased by 8.7% and 5.8%, respectively, resulting in an overall sales decline of 3.7%.

The B2B (corporate consumables) business saw sales increase by 22.9% compared to the same period last year. The packaging materials business expanded, and projects such as the Basra oil refinery in Iraq and the Qatar LNG export terminal expansion were particularly effective.

Cape Investment & Securities pointed out that for Hyundai Livart's stock price to rebound, it is necessary to show high growth potential not only in the newly launched kitchen furniture but also in baths and windows. The total interior market also appears to require active targeting. Hyundai Livart is transforming into a total interior company by launching the ultra-luxury (high-end) brand 'Giorgetti' and opening its first total interior store.

Researcher Misong Kim of Cape Investment & Securities said, "The total interior market exceeds 40 trillion KRW, but the market share of large companies is low, so competition for market share among companies will be fierce. Considering that furniture retail sales rose by over 20% since May last year due to increased demand for home renovations amid COVID-19, furniture sales growth is expected to slow next year."