[Click eStock] Hansae Yes24 Holdings, 'Apparel Supercycle'... Maximizing 1Q Earnings Momentum

[Asia Economy Reporter Kwon Jae-hee] Hana Financial Investment maintained a 'Buy' rating on Hanse Industrial and set a target price of 33,000 KRW on the 14th.

Hana Financial Investment forecasted that Hanse Industrial's sales and operating profit for the first quarter of this year would reach 528.9 billion KRW and 35.9 billion KRW, respectively. This represents growth of 41% and 22% compared to the same period last year, indicating strong performance momentum in the typically off-season first quarter. The deferred volume effect, which was not shipped in the third quarter of last year due to the Vietnam shutdown and logistics delays, is expected to add an additional 20%, estimating the order growth rate in dollar terms at 30%.

Seo Hyun-jung, a researcher at Hana Financial Investment, stated, "Along with steady demand growth from existing buyers, continuous inflow of new buyers is sustaining sales growth." She added, "Although the Vietnam factory's operating rate has not yet fully normalized to 100%, improvements in brand mix, the effect of the rising KRW-USD exchange rate, and increased contribution from high-margin winter products will push the operating profit margin to 6.8%."

Hanse Industrial is expected to continue double-digit sales growth in the second and third quarters due to strong inventory replenishment demand. This is because an upcycle phase in the apparel industry has begun, where sales and inventory accumulation occur simultaneously, and the gap between the US apparel sales growth rate and inventory growth rate has expanded to 10.3 percentage points, sustaining the direction toward inventory replenishment.

Researcher Seo analyzed, "Due to global supply chain disruptions, major US buyers are expected to intensively increase order volumes in the first half of the year, so Hanse Industrial, as a large vendor, will continue double-digit sales growth in the second and third quarters."

As the year progresses, productivity improvements and profitability enhancements are also expected due to the normalization of the Vietnam factory.

Hana Financial Investment projected Hanse Industrial's full-year 2022 sales and operating profit at 2.03 trillion KRW and 140.8 billion KRW, respectively, representing increases of 21% and 32% compared to the previous year.

Researcher Seo interpreted, "Considering the US apparel sales and inventory growth rates, the performance momentum will continue at least through the first half of the year."