[Click eStock] "Zero to Seven, Sustains High Growth in 2020 with 'Gungjungbichek'"

[Asia Economy Reporter Oh Ju-yeon] Hana Financial Investment maintained its 'Buy' rating and target price of 13,700 KRW on the 17th for Zero to Seven, stating that overseas sales of 'Gungjung Bichaek' are expanding, and sales growth of high-profit business units is expected due to facility expansion in the packaging division.

Zero to Seven recorded sales of 58.9 billion KRW and operating profit of 1.2 billion KRW in the fourth quarter of last year. Although the fourth-quarter sales showed only slight growth, the proportion of sales from high-profit business units increased significantly, indicating continuous structural improvement. The cosmetics division's sales ratio was 19.9% in Q4 2018 but rose to 39.0% in Q4 2019.

In particular, the infant skin care brand Gungjung Bichaek posted Q4 sales and operating profit of 23 billion KRW and 3.8 billion KRW, respectively, marking increases of 105.4% and 111.1% year-on-year.

Researcher Lee Jeong-gi analyzed, "Zero to Seven holds both a solid packaging division and a growing cosmetics division, and with restructuring underway in the fashion division, changes are expected." He added, "With the continuous expansion of overseas sales of Gungjung Bichaek and facility expansion in the packaging division, sales growth in high-profit business units is expected to continue," and mentioned, "They are establishing new strategies through reducing losses by online transformation of the fashion division and forming a joint venture (JV) with a Chinese fashion brand."

Sales and operating profit for this year are projected at 227 billion KRW and 22.6 billion KRW, respectively. Growth in the cosmetics and packaging divisions is expected to drive performance.

Researcher Lee said, "Gungjung Bichaek is expected to achieve another annual record high performance of 90.1 billion KRW (a 29.5% increase year-on-year) through strengthening online sales channels in China and expanding sales in Southeast Asia," and expressed expectations that "the packaging division will realize 39.9 billion KRW (an 11.2% increase) through the introduction of new pretreatment facilities and expansion of post-treatment facilities."

This content was produced with the assistance of AI translation services.