[Click eStock] "Zinus, Performance Normalization This Year... Expected Trump Beneficiary Stock"

KB Securities analyzed on the 10th that JINUS is likely to become a beneficiary stock of Trump as its performance normalizes this year.

JINUS's preliminary results for the fourth quarter of last year showed consolidated sales of 289 billion KRW, an increase of 5.9% from the previous quarter and 2.4% from the same period last year. Operating profit was 16.1 billion KRW, up 35.1% from the previous quarter, successfully turning profitable. For the full year, sales were 920.4 billion KRW, down 3.3% year-on-year, with an operating loss of 5.3 billion KRW recorded.

Looking at performance by category, mattress sales increased by 4.7% year-on-year to 670.6 billion KRW, but bedroom furniture (frame types) sales decreased by 20.3% to 225 billion KRW. Other furniture (such as living room furniture) sales also declined by 17.0% to 24.8 billion KRW. Notably, since the second quarter, the mattress segment has normalized, and with the launch of new products in the second half, sales are gradually expanding.

The quarterly operating rate also rose from 70.3% in the first quarter to 96.1% in the fourth quarter. The bedroom furniture segment has been in the process of normalization since the third quarter, but due to uncertainties in U.S. tariff policies, customers continue to reduce inventory levels.

At the beginning of last year, JINUS emphasized profit normalization through reducing loss-making SKUs (Stock Keeping Units) and improving logistics warehouse efficiency. Accordingly, about 1,000 loss-making SKUs were discontinued within the second quarter, and four leased warehouses in the U.S. were downsized.

The anti-dumping tariff issue on Indonesian mattresses exported by JINUS to the U.S. is also progressing positively. The U.S. Department of Commerce (DOC) re-evaluated the previously imposed anti-dumping tariff rates from the original 2.22% and first administrative review 6.75% to 0.00%. In the second annual administrative review of U.S. anti-dumping, a final determination of 0.00% was also received, and the final ruling from the U.S. Court of International Trade (CIT) is currently pending. If this ruling is finalized within the first quarter of 2025, there is a high possibility of a provision reversal, which is estimated to increase operating profit by 40 to 50 billion KRW.

Hyunkyum Kim, a researcher at KB Securities, said, “Although the uncertainty of tariff issues is increasing as the likelihood of former President Trump’s election rises, JINUS is in a favorable position compared to competitors,” adding, “As of 2023, the export volume of mattresses to the U.S. by country is 16.71 million units, with Indonesia accounting for 23.5% and Mexico 22.7%. This could highlight JINUS’s price competitiveness, which has a factory in Indonesia, compared to competitors with factories in Mexico.”

He also stated, “Recently, JINUS signed a new mattress ODM contract with a major offline customer in the U.S. This is part of a strategy to diversify the supply sources of customers who were previously concentrated in Mexico, and if Trump actually imposes tariffs, additional supply expansion can be expected.”