[Click eStock] "Brand X Corporation, Expected Benefits from Channel Expansion and Overseas Advancement"

Hi Investment & Securities Report

Hi Investment & Securities evaluated on the 31st that Brand X Corporation is expected to achieve performance growth through channel expansion and full-scale overseas advancement.

Brand X Corporation operates Jeximix, the No.1 brand in the domestic women's athleisure market share. Compared to 2020, sales in 2022 increased by 63.2%, and the sales proportion of the men's category expanded to the 10% range in the first quarter of this year. Park Ikyeong, a researcher at Hi Investment & Securities, said, “Based on high brand awareness, the company is pursuing an expansion strategy into similar categories,” adding, “The expansion strategy into high-priced categories such as athleisure and men's wear is helping not only external growth but also profitability improvement.”

Channel expansion is also ongoing. Although Jeximix is a digital native brand, it is steadily opening offline stores. Last year, offline channel sales growth rate was 46.4% compared to the previous year, accounting for 14.8% of total sales. About 15 domestic stores are expected to open this year. Most stores are still directly operated, but expansion is expected to focus on agency stores in the future.

Overseas sales growth is also anticipated. The company opened a 40-pyeong (approximately 132 square meters) store in Shanghai in April this year. The China business operates a wholesale structure where the partner company, Cheonma Sports, sells both online and offline. The partnership contract is valid until the end of this year, and discussions on future China business plans are presumed to be underway. Sales of the Japanese corporation are also growing. Last year, Japan accounted for about 35% of export volume, and the Japanese corporation's sales target for this year is 10 billion KRW. Researcher Park explained, “The company has secured a top sales position in the yoga and pilates wear category on Rakuten, Japan's largest online mall.”

Subsidiary restructuring and governance reorganization are also positive factors for the stock price. In December last year, the company sold Gelato Lab, which had a large deficit, and currently has three subsidiaries: Iruda Marketing, the Japanese corporation, and Healthcare. Due to the effects of governance restructuring, a sharp growth in annual earnings per share (EPS) is expected this year. Researcher Park said, “Despite positive factors, the stock price has declined, placing the valuation at a historical low,” adding, “It is a period that requires an approach considering future earnings momentum.”