[Click eStock] "Golfzon, Preemptive Recognition of Earnings Decline Concerns Due to Consumer Slowdown... Target Price Down"

Target Price Lowered from 100,000 KRW to 85,000 KRW

NH Investment & Securities on the 24th lowered the target price for Golfzon from 100,000 KRW to 85,000 KRW, citing concerns that profit declines due to weakening consumer sentiment have already been reflected in the stock price. The investment rating was maintained at 'Buy.'

Baek Joon-gi, a researcher at NH Investment & Securities, explained, "The target price downgrade is based on the downward revision of earnings estimates for 2025, grounded in adjustments to franchise store openings and round count estimates due to slowing consumption, as well as deteriorating profitability of Golfzon Driving Range (GDR). Nevertheless, the investment rating is maintained because the gross profit margin (GPM) is improving, and with an expected dividend yield of 7% in 2025 and a price-to-book ratio (PBR) of 0.8, it is considered sufficiently attractive even as a dividend stock."

Golfzon's fourth-quarter results last year are expected to fall short of market expectations. Researcher Baek stated, "Golfzon's consolidated sales for Q4 are expected to decrease by 18.5% year-on-year to 135.6 billion KRW, and operating profit is projected to decline by 16.7% to 12.3 billion KRW, falling short of market estimates. Although separate operating profit is expected to improve year-on-year, the consolidated operating profit is anticipated to decline due to poor performance of subsidiaries (Golfzon Cloud, Golfzon CM)."

Performance this year is also expected to be weak due to slowing consumer sentiment. NH Investment & Securities estimates Golfzon's sales for this year to decrease by 3.5% year-on-year to 602.6 billion KRW, and operating profit to decline by 6.9% to 90.4 billion KRW. Researcher Baek commented, "This is due to a reduced growth rate in round counts and a decrease in franchise store openings caused by weakening consumer sentiment. However, concerns about profit decline have already been priced into the stock, with a price-to-earnings ratio (PER) of only 6 times based on 2025 earnings." He added, "The GDR business is expected to reduce losses through active profitability improvements, and if additional businesses utilizing existing infrastructure, such as interior design, are added, sales growth could resume, maintaining the attractiveness of the business model."