On the 15th, SK Securities analyzed that Hwaseung Enterprise is expected to show a strong performance turnaround and growth in the third quarter of this year, as the favorable conditions of its front-end client Adidas continue.
Hyung Kwonhoon, a researcher at SK Securities, stated in a report on the same day, "Hwaseung Enterprise's third-quarter performance is estimated to record sales of 363.1 billion KRW and an operating profit of 19.8 billion KRW." Sales are expected to increase by 39% compared to the same period last year, and operating profit is expected to turn positive.
Researcher Hyung said, "The business conditions of the major client Adidas continue to be favorable, centered on footwear products," adding, "Excluding the inventory sales effect of the Yeezy series, pure Adidas footwear sales grew by 25% year-on-year in the second quarter. This positive momentum is expected to continue reflecting in Hwaseung Enterprise's performance in the third quarter."
He further explained, "With the inventory adjustment of the front-end client Adidas completed and footwear sales experiencing high growth, the global trend of running and the resulting increase in demand for running shoes are positively affecting Hwaseung Enterprise's order environment," and predicted, "Amid this ongoing trend, from the fourth quarter, new order momentum is expected to be added, focusing on Adidas's steady-selling shoes, which previously accounted for a low sales proportion at Hwaseung Enterprise."
Additionally, Researcher Hyung noted, "Due to concerns about a US economic recession, the performance uncertainty of OEM listed companies has generally increased," but added, "However, in the case of the company, the favorable business conditions of the front-end client Adidas are expected to continue, along with a momentum of increasing market share within the client," concluding, "We believe the company has sufficient momentum to overcome concerns about the industry."
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