[Click eStock] "Golfzon Accelerates Overseas Expansion Based on Strong Domestic Market"

Shinhan Investment Corp. analyzed on the 25th that Golfzon's franchise business is showing growth strong enough to dispel concerns about a peak-out in the golf market, and that the speed of overseas business expansion in the US and China will be a key point to watch going forward.

Golfzon recorded consolidated sales of 187 billion KRW and operating profit of 41.5 billion KRW in the first quarter. Compared to the same period last year, sales increased by 21.5%, while operating profit decreased by 18.1%. Sales exceeded market consensus by 3.5%, but operating profit fell short by 23.1%.

Researcher Lee Byunghwa of Shinhan Investment Corp. analyzed in the report that day, “The domestic franchise business segment achieved 94 billion KRW, and the non-franchise segment recorded 25.7 billion KRW. The number of rounds played was 24.37 million, up 10.6% year-on-year. Overseas sales amounted to 16.5 billion KRW, showing a 52.3% increase.”

He explained, “Profitability on the surface is somewhat disappointing compared to the scale of growth,” adding, “The first quarter operating margin was 22.2%, down 10.7 percentage points (p) year-on-year, largely due to costs related to opening new directly operated stores in the US.”

He estimated the compound annual growth rate (CAGR) of the franchise business from 2023 to 2025 at 11.9%, saying, “Although the growth rate will slow compared to the past four years, steady growth of over 10% annually, especially outside the metropolitan area, is highly feasible.”

He emphasized that overseas business expansion is an important checkpoint. He estimated that the proportion of overseas sales this year will rise by 1.8 percentage points from the previous year to 14.1%. Golfzon plans to expand its North American golf pub business from one location in 2022 to four in 2023. The Connecticut store, which began operations in early 2022, is expected to achieve annual sales of 2 billion KRW. In China, the company anticipates resuming screen golf course openings and expanding its simulator sales network.

He said, “Demand deferred during the pandemic is expected to return to a recovery trend from the first half of this year.”