[Click eStock] "Zero to Seven, Close to the Bottom... Earnings Rebound Expected Next Year"

[Asia Economy Reporter Ji Yeon-jin] Hanwha Investment & Securities announced on the 19th that it maintains a buy rating and a target price of 12,000 KRW for Zero to Seven, expecting a strong earnings rebound starting next year.

Kim Dong-ha, a researcher at Hanwha Investment & Securities, said, "As COVID-19 eases, the structural improvements made under the surface will become apparent, leading to a strong earnings turnaround from next year. We also expect investment sentiment to improve due to the resolution of overhang (investment association shares) and active discussions and responses to population decline in key markets (Korea and China)."

Zero to Seven's sales in the second quarter of this year were 23.8 billion KRW, down 22% year-on-year, and operating profit fell 56% to 800 million KRW. The fashion division continued to suffer losses, and the Gungjungbichek division temporarily slowed due to the impact of China's lockdown. However, the packaging division saw operating profit increase by 151%, signaling a full-scale recovery.

Researcher Kim said, "The second half is expected to show a better earnings trend than the first half. The fashion division is expected to reduce losses by minimizing inefficiencies, and the Gungjungbichek division will see increased sales due to China's normalization, lineup expansion, and the launch of new premium products."

This year, sales are expected to increase by 4% year-on-year to 107 billion KRW, and operating profit is projected to rise 198% to 6.9 billion KRW.