'Corona Home Training Enthusiasts' Apparel Stocks Show Mixed Fortunes

[Asia Economy Reporter Hwang Junho] The number of 'Corona Home Training' enthusiasts exercising at home has increased due to COVID-19. As more people decided to work out at home, sales of related apparel also surged significantly. Although sales initially declined sharply right after the outbreak of COVID-19, the 'Corona Home Training' crowd has become a savior for apparel companies. On the 30th, Daishin Securities analyzed the recent impact of the home training trend in this way.

COVID-19, Mixed Fortunes for the Apparel OEM Industry

After COVID-19 spread globally in early last year, global functional apparel Original Equipment Manufacturer (OEM) companies saw their order volumes drop by about 30-40%. In particular, manufacturers producing sportswear materials faced severe challenges. For example, Eclat, an OEM company specializing in functional woven fabric apparel, recorded only a 2% increase in sales in July-August last year compared to the previous year. This is hardly considered growth compared to Makalot, which manufactures general apparel and saw a 25% increase in sales. Makalot actually benefited from the COVID-19 special demand due to increased orders for masks and protective clothing.

Home Training Popularity Due to COVID-19... Functional Woven OEM Sales Surge

However, as COVID-19 was not easily contained and worsened in places like the U.S. and Europe, the challenges for apparel OEM companies intensified. Yet, the global demand for exercising at home, known as 'Home Training' enthusiasts, created opportunities for functional apparel OEM companies. Eclat's sales in the fourth quarter of last year increased by as much as 29% compared to the previous year. Even in 2019, before COVID-19, sales had grown. On the other hand, Makalot's sales increased by only 0.2%.

Daishin Securities expects that if vaccination starts this year and major consumer markets such as the U.S. and Europe lift lockdown measures, demand for general apparel could also recover substantially. In South Korea, apparel OEM companies Youngone Corporation and Hansae Co. are currently undervalued, with Youngone being particularly attractive as a COVID-19 beneficiary company. Hansae is expected to benefit from the global apparel OEM industry's restructuring, but as mentioned earlier, the special demand for quarantine products in the 2nd and 3rd quarters is placing short-term pressure on performance this year, so the stock price is expected to recover gradually after confirming this aspect.

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