[Click eStock] "Clio Expects Record High Sales if China and Japan Recover"

Hana Securities Report

[Asia Economy Reporter Minji Lee] Hana Securities maintained a buy rating on Clio on the 4th and set a target price of 22,000 KRW.

Clio's consolidated sales for the 4th quarter are estimated at 73.2 billion KRW, with an operating profit of 4.8 billion KRW, representing increases of 22% and 3% respectively compared to the same period last year. Despite weak sales in China and Japan, strong sales in the US and Southeast Asia led to sales exceeding market expectations. Operating profit slightly missed the market estimate of 5.4 billion KRW, reflecting the impact of incentives paid last year due to record-high performance.

Domestic and overseas sales in the 4th quarter are expected to grow by 30% and 7% respectively compared to the same period last year. Domestically, strong demand continues due to the release of trend-leading products, and despite weakness in China and Japan, overseas sales are expected to turn to growth driven by strong performance in the US and Southeast Asia. By channel domestically, the core channels H&B, online, and duty-free are expected to grow by 30%, 28%, and 30% respectively. On an annual basis, these channels are projected to show strong upward trends of 34%, 37%, and 19% respectively.

The overseas segment is expected to turn to growth in the 4th quarter, with Amazon Black Friday achieving record-high sales in the US, and demand rising in Southeast Asia. The combined sales of these two channels are projected to grow by 80% compared to the same period last year.

With China's reopening policy, the recovery of Chinese visitors to Korea is expected starting from the 2nd quarter. Eunjeong Park, a researcher at Hana Securities, stated, "It is estimated that 220,000 Chinese visitors came to Korea last year, while before COVID-19 in 2019, over 5 million Chinese visited Korea," and added, "Once the recovery of Chinese visitors to Korea fully begins, demand will concentrate on duty-free and H&B channels."

Researcher Park further analyzed, "Considering the effects of China's reopening and the launch of new products and channel expansion in Japan, sales recovery in key overseas regions is expected, and this year will likely set a new record for highest sales."