Jinuseu Seeks Rebound Through Establishing Local Factory in the US

[Asia Economy Reporter Eunmo Koo] Zinus is establishing a complex center in the United States that will handle production and logistics locally. The establishment of the complex center is analyzed as a win-win situation, enabling quick response to local demand while reducing the burden of anti-dumping lawsuits.

According to the Korea Exchange on the 21st, Zinus's stock price closed at 89,000 KRW, up 3.61% (3,100 KRW) from the previous trading day. During the session, it rose to as high as 97,900 KRW, reaching the highest level since the market plummeted due to the impact of the novel coronavirus (COVID-19). The rise on the previous day is interpreted as being influenced by the disclosure that Zinus secured a mattress production and supply base in the United States during the trading session, affecting investor sentiment.

Zinus announced through a disclosure on the previous day that it resolved to invest approximately 51 billion KRW to build a factory and logistics center in Henry County, Georgia, USA, capable of producing 1.8 million mattresses annually. This transaction involves acquiring land and existing buildings previously owned by a U.S. offline retailer. Through this investment, Zinus secured a mattress production and supply complex center in the U.S., which was one of the core business goals announced during its initial public offering (IPO) last year.

Attention is also focused on whether the establishment of this complex center can provide a turning point for the sluggish stock price since May. Zinus's stock price rose 113.9% until April following a market recovery after hitting a low of 39,700 KRW in March, but since then it has fluctuated between 80,000 and 90,000 KRW.

First of all, the fact that a production base has been established in the U.S. market, which accounts for about 90% of sales, is positive. Local production can reduce the time required from manufacturing to delivery, and it can also reduce tariffs and transportation costs that occurred when exporting from the existing Indonesian factory to the U.S.

Researcher Seryeon Kim of eBest Investment & Securities analyzed, "Although U.S. domestic production has higher labor costs than Indonesia, which may slightly lower the absolute profit margin, the reduction in time and cost for maritime transportation and price differentiation for U.S. domestic production can offset the margin decrease to some extent."

The local investment in the U.S. is also evaluated as reducing the burden of anti-dumping lawsuits that may be filed additionally in the future. In March, U.S. mattress manufacturers filed anti-dumping lawsuits against mattresses produced in seven countries, including Indonesia where Zinus's factory is located, and are awaiting the preliminary ruling from the U.S. Department of Commerce at the end of October.

Researcher Chiho Kim of Korea Investment & Securities said, "From the perspective of the risk of repeated anti-dumping lawsuits in the future, the investment in the U.S. production plant is positive," and added, "When uncertainty is resolved, new facility investments will be a strong basis for a rebound."

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