[Click eStock] "Baeksan, Beginning of Performance Improvement... Sales and Operating Profit to Increase from Next Year"

On the 6th, DS Investment & Securities maintained a buy rating and a target price of 12,000 KRW for Baeksan, stating that the company has passed through a sluggish period and is entering the early stage of improved performance.

Baeksan's sales for the fourth quarter of this year are estimated to be 97.5 billion KRW, down 1.5% year-on-year, while operating profit is expected to increase by 16% to 12 billion KRW. An Joo-won, a researcher at DS Investment & Securities, explained, "The recovery in sales of the sports shoe segment, which accounts for more than 70% of synthetic leather, continues, and profitability is expected to improve through cost reduction, resulting in performance exceeding 10 billion KRW. Although the fourth quarter is usually a seasonal off-season, the upstream market is improving, and new orders from key clients are increasing."

Although the apparel segment is expected to improve more slowly compared to sports shoes, it is anticipated to maintain operating profits above the quarterly break-even point (BEP). Furthermore, both sales and operating profit are projected to increase starting next year.

Baeksan is expected to become the market leader in synthetic leather for sports shoes. Researcher An said, "This is because Baeksan is demonstrating differentiated competitiveness in quality and delivery times, gaining trust from buyers. As order volumes increase, expansion is underway in Indonesia, with completion targeted for the first half of next year."

Sales of automotive interior materials have also increased annually since 2020. The product lineup includes steering wheel covers, seats, consoles, and door trims, and the range of applicable vehicle models is expanding. It is forecasted that annual sales will exceed 100 billion KRW starting in 2025.

Baeksan's sales for this year are expected to decrease by 12.8% year-on-year to 415.1 billion KRW, while operating profit is projected to increase by 5.7% to 53.1 billion KRW. Next year, growth is anticipated due to increased sales across all business segments and the reflection of new factory expansions, with sales and operating profit estimated at 484.2 billion KRW and 62.5 billion KRW, respectively.