[Click eStock] "Zinus, Rapid Recovery Despite US Logistics Crisis and Raw Material Price Surge"

[Asia Economy Reporter Ji-hwan Park] KTB Securities evaluated on the 28th that Zinus is recovering faster than expected despite the ongoing logistics crisis in the U.S. and rising raw material prices. They maintained a 'Buy' investment rating and a target price of 130,000 KRW.

Jinseong Ra, a researcher at KTB Securities, stated, "Although raw material prices and logistics burdens still exist, the impact is being minimized through price pass-through," adding, "Starting next month, direct production in the U.S. will enable response to the Biden administration's Buy America policy, and as logistics-related issues are resolved in the second half of the year, profitability is expected to improve."

As of the first quarter of this year, there is a clear expansion in business items. Mattress sales increased by 58.8% compared to the same period last year, and the effect of Indonesia's low anti-dumping ruling is expected to continue. Bedroom furniture sales rose by 33.3%, and other furniture sales increased by 38.6% compared to the same period last year. Regionally, during the same period, sales in the U.S. grew by 44.0%, and outside the U.S. by 122.2%.

Researcher Ra said, "The U.S. production corporation (Georgia) is scheduled to begin trial production from mid-this month and plans to start commercial production by operating some lines from June." The global logistics status has reverted major customers' transactions to DI transactions (direct purchase method).

Ra explained, "There are currently no delays in returns, and the No-Show rate has dropped from 50% to the 10% range," adding, "For DO transactions, from the second quarter of this year, operations have been improved by directly contracting with global shipping companies and securing maximum shipping capacity, and the intermediary margin previously paid to NVOCCs (forwarders) has been eliminated."

Regarding the rise in raw material prices, it is evaluated that rapid price pass-through to products demonstrates brand power. Researcher Ra emphasized, "Prices of chemical and steel raw materials used in mattress and furniture manufacturing continue to rise," and "Through various purchasing strategies, the impact of raw material price increases has been minimized, and the first round of price increases for some products was completed in the first quarter."

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