[Click eStock] "Youngone Trading, Conservative Approach Needed for Scott"

Daishin Securities maintained its investment opinion of 'Buy' and a target price of 56,000 KRW for Youngone Corporation on the 30th.

Yoo Jeong-hyun, a researcher at Daishin Securities, stated, "The OEM (Original Equipment Manufacturer) division showed more positive aspects than expected, but a more conservative approach is needed for Scott. Accordingly, we are revising profit and loss estimates by business division."

In the first quarter, OEM division sales in dollar terms decreased by 8%. The OEM division's operating profit margin was 17.8%, affected by the sales decline, the minimum wage increase in Bangladesh, and price reductions due to sluggish demand.

Including a 30% wage increase in Bangladesh, labor costs within the cost of goods sold rose by 21% year-on-year in the first quarter (including labor costs in Vietnam and other countries). While labor cost increases were significantly highlighted due to sales decline in the first half, orders are expected to recover in the second half, which should mitigate these negative effects.

It was analyzed that orders in the second half are likely to increase sufficiently, considering the rise in inventory assets such as raw materials and work-in-progress for production at the end of the first quarter. Although major clients, including the top customer Lululemon, are not yet actively securing inventory overall, order conditions are expected to improve over time. Overall productivity and profit margins have greatly improved compared to pre-COVID levels, but due to cost factors, margins this year are expected to be lower than last year.