[Click eStock] “SJ Group Benefits from Revenge Spending and Peak Season Effects”

Daishin Securities "SJ Group, Target Price Raised from 31,000 KRW to 36,000 KRW"
Export Momentum Also Becoming Visible

[Asia Economy Reporter Gong Byung-sun] SJ Group is expected to achieve strong performance in the second quarter of this year, driven by revenge consumption and the peak season effect.

On the 8th, Daishin Securities estimated SJ Group's sales for the second quarter of this year to be 38.6 billion KRW, a 32.2% increase compared to the same period last year, and operating profit to be 9.2 billion KRW, up 47.8%. The overall performance for this year is also expected to be positive. Daishin Securities predicted SJ Group's total sales for this year to increase by 34.0% year-on-year to 143.5 billion KRW, and operating profit to rise by 54.5% to 27.9 billion KRW.

The trend of revenge consumption after COVID-19 has acted as a favorable factor for SJ Group. SJ Group's flagship brand Kangol is estimated to have a 13% increase in sales per store compared to 2019, before the outbreak of COVID-19. Researcher Han Kyung-rae of Daishin Securities explained, "As the benefits of revenge consumption continue, the offline clothing and bag sales sectors recorded strong performance."

The peak season effect is also expected. In May, the peak season for children's clothing brands, Kangol Kids expanded its market influence. With the brand effect expanding, Kangol Kids saw both sales per store and the number of newly opened stores increase by more than 50% compared to the same period last year in the second quarter. Online sales are also expected to surge, increasing by 90% year-on-year. The researcher said, "In May, the peak season for children's clothing brands, Kangol Kids established itself as the second-largest kids brand overall." The women's luxury hat brand Helen Kaminski also increased product sales by more than 25% in the second quarter, the peak season, compared to the same period last year.

The export momentum is also expected to become visible. Export segment profits, which were less than 1 billion KRW in 2019, exceeded 1 billion KRW last year and are expected to reach about 2 billion KRW this year. The researcher explained, "We expect the export scale to exceed 4 billion KRW next year."

Accordingly, Daishin Securities maintained its 'Buy' investment rating on SJ Group. The target stock price was raised from the previous 31,000 KRW to 36,000 KRW. The researcher said, "In September, the launch of the complex content platform LCDC and the release of five new adult brand shoes are scheduled," adding, "With the acquisition of the new brand 'Pan Am,' steady domestic growth is expected to continue."

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