[Click eStock] "Zero to Seven, Earnings Expected to Improve Next Year"

Hanwha Investment & Securities "Maintain Zero Two Seven Target Price at 18,000 Won"

(Provided by Hanwha Investment & Securities)

[Asia Economy Reporter Gong Byung-sun] Zero to Seven is expected to recover its performance in the second half of this year at a slower pace than anticipated. However, securities firms suggest that attention should be paid to next year's performance.

On the 23rd, Hanwha Investment & Securities estimated Zero to Seven's Q3 sales this year to be 31.4 billion KRW, a 1% decrease compared to the same period last year, and operating profit to be 3.2 billion KRW, a 1742% increase over the same period. Net profit is expected to turn positive at 2.2 billion KRW.

Although showing signs of recovery, the pace is somewhat slow. Hanwha Investment & Securities also revised down Zero to Seven's annual sales from 128.2 billion KRW to 126.3 billion KRW, and operating profit from 13.7 billion KRW to 10.7 billion KRW. Kim Dong-ha, a researcher at Hanwha Investment & Securities, said, “In the fashion sector, inventory-related costs have increased, and in the cosmetics sector, the expected number of Chinese tourists entering the country has decreased. However, there is no change in the overall direction, so profit improvement is possible in every quarter this year.”

(Provided by Hanwha Investment & Securities)

Zero to Seven's performance next year is promising. Thanks to the momentum of online transition, fashion deficits have significantly decreased, and cosmetics exports continue to grow. In fact, the company is increasing its recognition in the Chinese infant and children's cosmetics market. The size of the Chinese infant and children's cosmetics market barely exceeded 5 billion yuan (approximately 912.5 billion KRW) in 2015 but is expected to grow to 20 billion yuan by 2025, making it a promising industry.

It is also expected to benefit from the recovery from COVID-19. As cosmetics duty-free sales increase and the Oceania region recovers from COVID-19 and resumes economic activities, packaging operation rates are also expected to rise. Researcher Kim emphasized, “We will achieve a profit level different from the past.”

Accordingly, Hanwha Investment & Securities maintained its investment opinion of ‘Buy’ for Zero to Seven and its target stock price of 18,000 KRW. As of the 17th, the closing price was 11,600 KRW.

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