[Click eStock] "Youngone Corporation, 'Safe Alternative' Appropriate... Target Price Up"

Acceleration of Turnaround

DB Financial Investment evaluated Youngone Corporation on the 7th, stating that "considering the acceleration of turnaround (performance improvement) and valuation attractiveness, it is an appropriate safe alternative." Accordingly, they raised the target stock price to 60,000 KRW and maintained a 'Buy' investment rating.

Huh Jena, a researcher at DB Financial Investment, explained, "Despite the recent steady rise in Youngone's stock price, the expected price-to-earnings ratio (P/E) for this year is only 5 times," adding, "Given the continued strong dollar environment, the acceleration of the turnaround in the original equipment manufacturing (OEM) division, and the recovery phase of the bicycle division 'Scott,' there are sufficient incentives to buy."

Youngone's OEM division continued a strong turnaround in the fourth quarter of last year, following the previous quarter. Dollar orders increased by 20% compared to the previous year, and despite the minimum wage increase in Bangladesh, profitability was successfully defended, according to researcher Huh. He noted, "Orders are flowing in as the growth of key buyers such as The North Face, Patagonia, Lululemon, and Arc'teryx continues, and the pressure to lower unit prices is not as strong compared to other companies, which is positive," adding, "The OEM division is expected to show a steady growth trend this year with dollar orders growing at a single-digit rate."

Youngone recorded consolidated sales of 846.9 billion KRW and an operating loss of 13.6 billion KRW for the quarter. Sales increased by 11.8% year-on-year, exceeding market expectations, while operating profit fell significantly short of forecasts.