[Click eStock] "Hansome, New Brand Effect... Bottom Buying Effective"

[Asia Economy Reporter Kwon Jae-hee] NH Investment & Securities maintained its 'Buy' rating and target price of 36,000 KRW for Handsome on the 21st.

Handsome's Q4 consolidated sales are estimated at 486.7 billion KRW, with an operating profit of 53.2 billion KRW. This represents increases of 9% and 3%, respectively, compared to the same period last year. By channel, online sales are expected to grow by 5% and offline sales by 10% year-on-year. In Q4, there was a base effect from the previous year, and the mild weather in November likely led to weaker-than-expected sales of high-priced coats. However, department stores, the main sales channel in December, are understood to have re-entered a growth trend, and the launch of new brands such as Our Legacy and Lanvin Blanc in August is expected to sustain a high single-digit growth rate. Accordingly, the Q4 operating profit margin is estimated to have declined by 0.7 percentage points year-on-year to 10.9%.

From next year, Handsome plans to accelerate the strengthening of its imported brand portfolio. Currently holding exclusive distribution rights for 'Gabriela Hearst,' 'Veronica Beard,' and 'Tot?me,' among others recently secured, the company currently has 13 imported brands and aims to increase this to around 20 by next year. As a result, annual sales from imported brands, currently around 400 billion KRW, are expected to grow to 1 trillion KRW within the next five years. The expansion of imported contemporary zones and the reorganization of new brand MDs at the three major domestic department stores are expected to be active next year, which is anticipated to bring significant changes, as the number of imported brands held has been relatively small and thus overlooked until now.

Jiyoon Jeong, a researcher at NH Investment & Securities, analyzed, "Although negative factors such as a slowdown in the retail market and weakened investment sentiment persist, the annual net profit exceeds 100 billion KRW, and operating cash flow remains healthy. With liquidity secured through the sale of non-current financial asset Southcape shares (45 billion KRW), investments in new imported brands are supplementing the low growth potential. Given the undervaluation with a price-to-book ratio (PBR) of 0.5 times next year, it is a timely moment to pay attention to the future business direction."