[Click eStock] "Coway, Overseas Business Growth Potential... A Buying Opportunity at Low Prices"

[Asia Economy Reporter Ji Yeon-jin] Yuanta Securities announced on the 18th that Coway is expected to recover its annual sales growth rate to around 4% this year, maintaining a target stock price of 96,000 KRW, and judged that a low-price buying strategy would be effective.

Coway's sales in the fourth quarter of last year increased by 8.6% year-on-year to 862.6 billion KRW, and operating profit surged by 190.9% to 129.8 billion KRW. This is interpreted as a result of the resolution of the Service Manager Strike issue, which normalized the net increase in domestic rental accounts.

The domestic business division recorded sales of 667.2 billion KRW, up 4.5% year-on-year. The net decrease in domestic rental accounts in the previous quarter turned into a net increase of 47,000 accounts due to the return of service managers from the strike and strong sales of new products. The operating profit margin was identified as sluggish at 11.8%, driven by one-time costs such as regular employee expenses for service managers and sales receivables write-offs, as well as increased marketing expenses, which led to margin deterioration.

The Malaysian subsidiary's sales grew by 44.5% year-on-year to 220.4 billion KRW, and operating profit increased by 157.5% to 52.0 billion KRW. This is considered a strong performance due to changes in accounting standards related to financial leases.

From an operating environment perspective, assuming that most of the net increase in overseas rental accounts comes from the Malaysian subsidiary, it is analyzed that there was a net increase of more than 120,000 accounts.

Yuanta Securities analyst Lee Jin-yeop said, "The deterioration in the operating environment due to internal issues has been resolved, and domestic sales growth is expected to recover to around 4% this year," adding, "The Malaysian subsidiary is expected to grow by 48% year-on-year, further expanding its growth potential."

Due to the profit increase from the high growth of the Malaysian subsidiary, the company's overall operating profit is expected to reach 612.2 billion KRW, a 0.9% increase year-on-year, and operating income is forecasted to rise by 26% to 163.9 billion KRW. The analyst added, "As the contribution of the Malaysian subsidiary grows, Coway's growth potential is expected to expand further," and "Entry into new countries such as Indonesia and Vietnam can also act as future growth drivers."

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