[Click eStock] "Pond Group, Rising Star in K-Fashion"

Yuanta Securities analyzed on the 13th that Pond Group is a rising star in the K-fashion industry and has no reason to receive a low valuation.

Kwon Myung-jun, a researcher at Yuanta Securities, stated in a report on the same day, “Pond Group recorded provisional consolidated sales of 72.8 billion KRW and operating profit of 5.1 billion KRW in the third quarter of this year, growing 12.9% and 43.0% respectively compared to the same period last year.” He added, “The increase in performance was driven by the expansion of e-commerce channels, the launch of new brands, offline sales contributions from Superdry, Helvesko, BBC Earth, and the results of Most, a cosmetics overseas distribution company acquired last September.”

However, he explained that the reason for the lower operating profit margin in the third quarter compared to the first and second quarters was due to increased costs related to the launch of new brand stores (store interior, marketing).

Researcher Kwon said that a significant sales growth is expected for Pond Group in the fourth quarter. He predicted, “Sales from the acquired brand Universe (brand Spider) will start to be reflected in the fourth quarter. Also, starting from the third quarter, the weather pattern changed from El Ni?o to La Ni?a, causing temperatures to drop rapidly. Since fall/winter (F/W) clothing has a higher average selling price (ASP) compared to spring/summer (S/S), the consumption of higher ASP clothing is expected to increase as the temperature drop widens.”

He analyzed, “The reasons clothing companies receive lower valuations compared to other domestic industries are sales growth slowdown, low export ratio, and lack of new growth momentum. Pond Group is expected to see an upward revision in valuation due to growth rate expansion from the sales reflection of the new brand Spider, overseas expansion of the Asian IP brand Superdry, and acquisition of Most, which distributes domestic cosmetics overseas, providing new growth momentum.”