On the 10th, Hanwha Investment & Securities forecasted that Coway, a leading rental company in Korea, will continue to maintain its market dominance over competitors. Due to the capital-intensive nature of the rental business, it is analyzed that the cash flow generated from the existing 10 million accounts will be the source of competitiveness.
Lee Jin-hyeop, an analyst at Hanwha Investment & Securities, explained in a report on the same day, "The rental business is a capital-intensive industry where the cash recovery speed is slow compared to the initial capital expenditure (CAPEX)," adding, "The cumulative number of rental accounts creates differences in competitiveness." He particularly diagnosed, "In the current market environment with high interest rates, the competitiveness gap due to financial strength is inevitable."
The analyst evaluated, "In Coway's case, the cash flow (CF) generated from approximately 10 million accounts enables more aggressive marketing and product investment compared to latecomers, serving as a key driver for expanding market share."
Accordingly, he forecasted, "Even if interest rates decrease again, the trend of Coway overwhelmingly outperforming competitors in its core products, including water purifiers, environmental home appliances, and healthcare appliances (Birex), will continue for at least 2 to 3 years."
He anticipated, "After the domestic market share expansion phase, Coway will be able to achieve a meaningful profit scale in new markets such as Thailand and Malaysia."
He added, "In the second quarter of this year, sales and operating profit are expected to increase by 6% and 10% year-on-year, reaching 1.07 trillion won and 213.7 billion won, respectively," and stated, "Reflecting the improving performance trend, the target stock price is raised to 79,000 won (current stock price 59,900 won)."
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