[Click eStock] "Hanssem, Earnings Expected to Improve from Q3... Target Price Maintained"

2Q Slump Despite, Growth Outlook for 2H Remains Valid
Increase in Housing Transactions and Profitability Improvement Expected to Reflect in 2H

Shinhan Investment Corp. maintained a 'Buy' rating and a target price of 78,000 KRW for Hanssem on the 13th, stating that its performance is expected to improve from the third quarter. Hanssem's closing price on the previous trading day was 55,500 KRW.

Seonmi Kim, a researcher at Shinhan Investment Corp., said, "Despite the weak performance in the second quarter, expectations for performance growth in the second half of the year remain valid," adding, "Improved profitability due to increased housing transaction volume and changes in the sales composition of business segments is expected to support this." She noted that although a sharp recovery in performance in the third quarter may be difficult due to seasonal off-season effects, improvements in housing indicators are expected to support stock price gains. Researcher Kim recommended Hanssem as the top pick in the construction and building materials sectors.

Hanssem's consolidated sales in the second quarter were 478 billion KRW, and operating profit was 7.1 billion KRW, falling short of consensus (market average forecast) by 6% and 52%, respectively. The main reasons were ▲ reduction of non-profitable businesses such as home shopping ▲ sales decline due to the time lag between increased housing transaction volume and reflected performance (impacting operating profit by approximately -7.8 billion KRW), and ▲ recognition of a 4.6 billion KRW allowance for doubtful accounts due to the Timef incident. Although the performance was weak, the continued improvement in profitability due to cost efficiency and changes in the B2C (business-to-consumer)/B2B (business-to-business) mix was positively evaluated.

Researcher Kim stated, "Performance of the rehouse segment after the third quarter is important," adding, "If rehouse performance remains weak despite increased housing transaction volume, it could be interpreted as a loss of market share." The July rehouse performance was understood to have improved compared to June. Considering the government's measures to revitalize the local housing market and expectations of interest rate cuts, performance improvement is anticipated after the third quarter. According to estimates by Shinhan Financial Investment, operating profits for the third and fourth quarters are expected to be 11.4 billion KRW and 16.1 billion KRW, respectively.