[Click eStock] "Zinus, 1Q Earnings Plummet... Stock Price Also Hits Bottom"

Heungkuk Securities evaluated that although Zinus recorded poor first-quarter results this year, the stock price is at a level where it is difficult to fall further. Accordingly, they maintained a 'Buy' investment rating and a target price of 51,000 KRW.

Choi Jong-kyung, a researcher at Heungkuk Securities, stated, "Both sales and profits in the first quarter of this year recorded the largest decline since 2021," adding, "In particular, the revenue scale is at the lowest quarterly level since the 2019 relisting (excluding Q4 2020 due to abnormal logistics costs)."

First-quarter sales amounted to 229.1 billion KRW, down 21.2% year-on-year, and operating profit plunged 70.6% to 8.3 billion KRW.

By product category, mattress sales decreased by 25.8% to 130.3 billion KRW, and furniture other than mattresses declined by 14.3% to 98.8 billion KRW. By region, the U.S. recorded 186.6 billion KRW, down 26.3%, while global sales outside the U.S. increased by 12.9% to 42.5 billion KRW (+12.9% YoY).

In other words, mattress sales in the U.S. were sluggish. Researcher Choi analyzed, "A significant drop in sales in the DI division occurred due to order restrictions caused by excess inventory at major customers," and "Additionally, profits decreased due to increased selling and administrative expenses from aggressive marketing expansion aimed at expanding the global market and market share in regions such as Asia."

Although poor performance is inevitable, the reason for maintaining the 'Buy' rating is the current stock price. Researcher Choi evaluated, "The stock price has experienced two bottoms (around a market capitalization of 530 billion KRW) over the past year, and there is nowhere lower to go."

There are also positive aspects. Researcher Choi explained, "The cost of goods sold ratio decreased by only 3.5 percentage points compared to last year due to normalization of raw material and ocean freight costs."

He also diagnosed, "Quarterly sales in domestic and European regions increased by 61.5% and 12.5% respectively compared to last year," adding, "The expansion of global markets outside the U.S. continues with the establishment of a new subsidiary in New Zealand in March and plans to establish a subsidiary in Mexico in the second half of the year."