[Click eStock] "Coway, Domestic Performance Normalization and Overseas Sales Expansion Expected"

Shinhan Financial Investment Report

[Asia Economy Reporter Minji Lee] Shinhan Financial Investment maintained its buy rating and target price of 100,000 KRW for Coway on the 30th. This decision is based on the judgment that there is sufficient room for further growth considering stable earnings growth due to the normalization of domestic operations and rapid growth of overseas subsidiaries.

Coway's sales in the fourth quarter reached 848.3 billion KRW, a 6.8% increase compared to the same period last year. Operating profit is expected to be 132.7 billion KRW, a 197.3% increase from the same period last year, reflecting a one-time cost base effect related to the 77 billion KRW retirement allowance recorded in the fourth quarter of last year. The number of accounts is estimated to have increased by 1% domestically to 6.34 million and by 31.1% overseas to 1.93 million. Overseas subsidiary sales are expected to have increased by approximately 29.8% to 246.3 billion KRW. The sales proportion is expected to have expanded to 29%.

The normalization of domestic operations is anticipated along with the conversion of CS Doctors to full-time employees. Domestic segment performance had been sluggish due to weakened sales capabilities caused by the CS Doctor strike, but full-scale normalization of domestic operations is expected following the conversion to full-time employment. The effect of new product launches such as the iCon water purifier, humidifier, and air purifier is also anticipated. Separate sales for next year are estimated to grow by 2.3% compared to this year, reaching 262.8 billion KRW.

The high growth of overseas subsidiaries is also positive. Overseas subsidiary sales for next year are projected to increase by 29.2% compared to this year, reaching 1.1222 trillion KRW. Sales of the Malaysian subsidiary are estimated to grow by 30% to 889 billion KRW compared to this year. In the U.S., Coway was ranked first and second for the best air purifiers in the New York Times Consumer Reports, and continuous sales growth is expected due to brand image building. Seungwoong Lee, a researcher at Shinhan Financial Investment, said, “With successful entry into overseas markets, an increase in total accounts and simultaneous earnings growth are expected,” adding, “Expansion of overseas sales also raises expectations for valuation reappraisal.”

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