[Click eStock] "Yeonwoo, Approaching Q1 Conservatively"

Shinyoung Securities Report

[Asia Economy Reporter Minji Lee] Shin Young Securities maintained a buy rating on Yeonwoo on the 17th and set a target price of 32,000 KRW, down 5% from the previous target. This decision was based on the judgment that a conservative approach is necessary in the first quarter despite solid performance in the fourth quarter of last year.

Yeonwoo recorded sales of 70.7 billion KRW and operating profit of 7.2 billion KRW in the fourth quarter of last year, growing 6% and 7.7% respectively compared to the same period the previous year. Domestic sales amounted to 35.2 billion KRW, and order sales were 35.5 billion KRW. On an annual basis, sales reached 287.1 billion KRW and operating profit 49 billion KRW, marking growth of 14.3% and 36.3% year-on-year. Domestic sales totaled 161.3 billion KRW, while order sales were 125.8 billion KRW.

Shin Su-yeon, a researcher at Shin Young Securities, said, “The company’s fourth-quarter performance was in line with market expectations. Although there was disappointment due to sluggish orders from major clients, strong orders from other domestic clients and favorable export conditions maintained a positive trend.” The Americas region is favorable due to improved cosmetics consumption, and Europe is expected to improve as direct sales systems begin at partner companies. It is analyzed that the special bonuses, usually paid in the fourth quarter, were deferred to January last year due to internal circumstances, allowing the fourth-quarter operating profit margin to remain in the 10% range.

Researcher Shin added, “Since both special bonuses and Lunar New Year bonuses will be reflected in the first quarter, a conservative approach to profitability is necessary. Due to the expanded uncertainty in consumer sentiment in the China channel, which emerged from the fourth quarter of last year, a decrease in orders from major domestic clients is expected, so a pattern of lower first half and stronger second half can be anticipated next year.”

The performance guidance for this year suggests sales of 320 billion KRW and an operating profit margin above 10%, but the company conservatively estimates sales compared to guidance, considering order uncertainties in the first half. Researcher Shin noted, “If the delayed export volume to the Americas due to shipping issues is recognized as sales in the future, there is a possibility of raising the target price through improved performance.” She also added, “Last year’s dividend per share (DPS) was 190 KRW, with a differential dividend of 140 KRW applied to major shareholders and related parties.”

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