[Special Stock] Hwasung Enterprise Hits 52-Week High... Expectations Rise on Earnings Improvement

52-Week High Broken in 5 Months
Key Client Adidas Shows Signs of Recovery
Operating Rate at 98%, Pre-COVID Level

Hwasung Enterprise recorded a 52-week high, marking the first time in about five months. This is interpreted as reflecting expectations of improved performance.

As of 9:44 AM on the 16th, Hwasung Enterprise is trading at 9,710 KRW, up 6.94% (630 KRW) from the previous trading day. This surpasses the 52-week high of 9,580 KRW recorded in December last year. The stock price of Hwasung Enterprise, which had fallen to 6,580 KRW earlier this year, has recently broken out of its downward trend and entered an upward trajectory.

Hwasung Enterprise is a footwear original equipment manufacturer (OEM). Its largest client is Adidas. When Adidas turned to a loss for the first time in 31 years last year, Hwasung Enterprise also suffered significant damage. Last year, sales amounted to 1.2138 trillion KRW, a 26.61% decrease from 1.654 trillion KRW the previous year, and operating profit plunged 75.38% from 52.8 billion KRW to 13 billion KRW during the same period.

However, with Adidas recently showing signs of recovery, Hwasung Enterprise is also smiling brightly. Adidas raised its 2024 operating profit guidance from 500 million euros to 700 million euros. Yu Jeong-hyun, a researcher at Daishin Securities, stated, "With the recovery of the footwear OEM industry, Hwasung Enterprise's performance improvement trend is expected to steeply appear from the second half of the year," adding, "The current operating rate in the second quarter is 98%, recovering to pre-COVID levels." He also forecasted that margins will improve progressively from the first quarter low through the second quarter and into the second half of the year.