[Click eStock] "Hanssem, 'Industry Slowdown', Target Price Downgraded"

On the 7th, LS Securities downgraded the target price for Hanssem from 70,000 won to 60,000 won, citing "the ongoing impact of the industry slowdown." The buy rating was maintained. The closing price on the previous day was 46,000 won.

On the same day, Kim Seryeon, a researcher at LS Securities, stated, "In the long term, sales growth will appear in proportion to the pace of macroeconomic recovery, but at this point, it seems difficult to cause short-term fundamental changes with cost control alone."

Hanssem's performance in the fourth quarter of last year showed weak operating profit relative to sales. During this period, sales amounted to 490.4 billion won, similar to the same period last year, and exceeded the market average forecast by 6.3%. Researcher Kim analyzed, "This was due to expanded sales activities focused on moving demand from large-scale move-ins in specific areas of Seoul in the B2C (business-to-consumer) sector."

However, operating profit was 3.9 billion won, down 66.6% compared to the same period last year, falling short of the market average forecast by 61.7%. Researcher Kim explained, "As the move-in cycle reached its final stage, B2B (business-to-business) sales rapidly declined, increasing the proportion of fixed costs. Incentive-related expenses of about 7.8 billion won were also incurred in the fourth quarter of last year. Excluding these incentive expenses, operating profit aligns relatively well with market expectations."

Growth limitations due to macroeconomic sluggishness are expected to continue for the time being. Researcher Kim said, "Given Hanssem's structural characteristic of incurring many fixed costs, a meaningful turnaround requires operating leverage (where operating profit increases more than proportionally once sales exceed a certain level) accompanied by sales growth." However, he added, "It is difficult to find a growth breakthrough due to the recent slow pace of interest rate cuts, expanded government real estate loan regulations, and contraction in trading volume caused by domestic and international risks."