[Click eStock] Shinhan Investment Corp "Improvement in Apparel Industry in Second Half"… Hanse Industrial, Target Price Up

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment announced on the 19th that it maintains a buy rating on Hanse Industrial and slightly raised the target price to 22,000 KRW, expecting the apparel industry to improve in the second half of the year.

Hanse Industrial reported consolidated sales of 368.7 billion KRW in the fourth quarter of last year, down 25.9% year-on-year, and an operating loss of 27 million KRW, turning to a deficit. The dollar order growth rate recorded minus 4.3% compared to the same period last year. Net profit turned positive to 36.9 billion KRW due to losses related to the sale of Hansem MK (26 billion KRW), corporate tax refunds (24 billion KRW), and foreign exchange valuation gains.

As an Original Equipment Manufacturer (OEM) in the apparel sector, Hanse Industrial's future performance will be composed solely of the existing OEM segment following the sale of the consolidated subsidiary Hansem MK. The expected order growth rate for the first quarter of this year (in USD) is projected to increase by 9.3% year-on-year. The dollar order and KRW sales growth rates for the second quarter are estimated at 23.2% and -27.3%, respectively, compared to the previous year. It is anticipated that the significant sales decline in the second and third quarters is unavoidable due to the exclusion of mask and protective clothing sales reflected last year. The annual order growth rate is expected to be 14.6% year-on-year.

Park Hee-jin, Deputy General Manager and Research Fellow at Shinhan Financial Investment, stated, "Despite the expected performance trend, recent stock price volatility has been significant due to front-end retail sales data and production expectations in Vietnam for January." He added, "January U.S. apparel sales and December inventory reduction rates were 11.1% and -9.3% year-on-year, respectively, indicating a somewhat slow improvement trend, but we expect industry conditions to improve in the second half of the year."

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