[Click eStock] "Hansae Yes24 Holdings, 1Q Earnings Surprise... Momentum Expected to Continue"

[Asia Economy Reporter Lee Jung-yoon] Hana Financial Investment maintained a buy rating and a target price of 33,000 KRW on Hansae Co., Ltd. on the 17th, stating that the company recorded an earnings surprise in the first quarter of this year and is expected to sustain strong performance momentum in the second half.

Hansae's consolidated sales for the first quarter of this year amounted to 581.2 billion KRW, a 55% increase compared to the same period last year, and operating profit rose 66% to 49 billion KRW. The operating profit significantly exceeded the market expectation of 34.6 billion KRW, marking an earnings surprise.

Seo Hyun-jung, a researcher at Hana Financial Investment, explained, "The deferred volume that was not shipped due to the Vietnam shutdown and logistics delays in the third quarter of last year was added, resulting in a 43% year-on-year sales growth in dollar terms," adding, "Due to the exchange rate effect, sales in KRW terms achieved a 55% growth compared to the previous year." She continued, "Although the operating rate of the main factory in Vietnam remained at about 70%, causing the cost ratio to rise by 1.7 percentage points, the expansion of sales volume and the exchange rate effect significantly alleviated the fixed cost burden, resulting in an operating profit margin of 8.4%."

Hansae is expected to see more than a 15% increase in orders in the second quarter of this year due to continuous inventory replenishment demand from buyers in the upstream industry. In terms of profitability, the operating profit margin is estimated to reach around 7% due to normalization of the Vietnam factory's operating rate and improvement in brand mix.

Researcher Seo said, "In the third quarter of this year, the earnings momentum is expected to be the strongest throughout the year due to the base effect," adding, "In the mid to long term, the company plans to enhance earnings visibility through continuous production scale expansion and vertical integration by establishing a fabric production corporation in Central America."

Additionally, Seo noted, "Since there is a possibility of rising inflation and weakened consumer sentiment in the U.S., the upstream market, it is recommended to gradually buy while monitoring key macro indicators and earnings trends."