[Click eStock] "Coway, Stable Cash Flow Generation... Target Price Up 6%"

Target Price Raised from 68,000 Won to 72,000 Won
Performance Stability More Attractive than Major Shareholder Uncertainty
"Next Malaysia is Thailand"

Shinhan Investment Corp. raised the target price for Coway by 6% from 68,000 KRW to 72,000 KRW on the 13th, citing the company’s business model that generates stable cash flow as positive. The investment rating of 'Buy' was also maintained.

Sanghoon Jo, a researcher at Shinhan Investment Corp., said, "We focus on earnings stability rather than uncertainties related to major shareholders," adding, "a business model that generates stable cash flow regardless of consumer sentiment is attractive as it is largely unaffected by changes in the largest shareholder." He continued, "The rising proportion of overseas sales and the renewed interest in personal hygiene are also positive factors."

Coway’s sales in the fourth quarter of 2023 were 1.0044 trillion KRW, with an operating profit of 1.662 billion KRW. Domestic rental sales volume was 360,000 units, and net increase in rental accounts was 47,000, showing solid performance. Researcher Jo stated, "Although ownership of sales accounts from five years ago has increased, the company overcame this by creating new customers through the launch of innovative products." He added, "In overseas markets, Malaysia’s sales declined by 5% due to a consumer downturn and sales staff attrition, but operating profit increased by 60% thanks to reduced advertising expenses." The U.S. market saw a 5% increase in sales and turned profitable, while Thailand’s sales growth slowed due to restructuring for mid- to long-term growth.

Malaysia’s high growth over the past eight years is slowing down. Researcher Jo said, "The keys to future growth are 1) expanding the customer base for water purifiers and 2) expanding the market for new home care products such as air conditioners and massage chairs," adding, "The next Malaysia is Thailand." Thailand started its business in 2003 but experienced slow growth due to underdeveloped financial infrastructure. Recently, with the development of financial infrastructure and strengthened sales personnel, it is growing rapidly. This year, it aims for sales growth of over 30%.