[Click eStock] "Hansae Yes24, Improving Order Quality... Target Price Up"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment maintained a 'Buy' rating on Hanse Industrial, citing an improvement in the quality of orders, and raised the target price from the previous 18,000 KRW to 24,000 KRW.

During a non-face-to-face meeting with analysts on the 22nd, the company presented this year's target sales of 1.927 trillion KRW and operating profit of 70 billion KRW, and next year's sales of 1.9382 trillion KRW and operating profit of 100 billion KRW. On the 23rd, Hyunjin Park, a researcher at DB Financial Investment, stated in a report, "Although the sales guidance appears conservative considering the highly uncertain macro environment, the reason for the significant improvement in profit margins is judged to be not only the expansion of automated processes and improvements in in-house productivity but also the rise in average order unit prices." He explained, "The profit contribution from increased production of masks and protective clothing was significant in the second quarter and continues into the third quarter, and the volume for next year's S/S season has increased sharply, indicating a rapid recovery in operating rates." Furthermore, he analyzed, "Judging from the improvement in the quality of orders, the rapid vendor consolidation during the global crisis caused by COVID-19 seems to have a positive effect on Hanse Industrial."

The quality of orders is evaluated to be improving. Researcher Park said, "Currently, the volume from Walmart and Target in the U.S. appears to be increasing significantly, with an increase in table orders that contribute favorably to margins, leading to a rise in average order unit prices." He added, "Of course, the profit forecast for next year needs to be updated again around the first quarter of next year when provisional orders for the peak seasons in the second and third quarters become clearer." He also noted, "There is sufficient value in positively evaluating the fact that expectations for third-quarter earnings have been raised again, and the operating profit for the third quarter is expected to have exceeded consensus at 43.5 billion KRW, driven by increased sales of masks and protective clothing."

The investment opinion remains 'Buy,' and the target price has been raised from 18,000 KRW to 24,000 KRW. Researcher Park explained, "It seems necessary to monitor the macro environment to determine whether the gap between next year's estimates and guidance can be narrowed. However, since the short-term profit momentum is judged to be better than expected, we continue to maintain a buy perspective."

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