[Click eStock] "Presidential Candidates' Pledge to Expand Housing Supply... Benefit for LX Hausys"

[Asia Economy Reporter Kwon Jae-hee] Yuanta Securities announced on the 4th that it maintains a buy rating and a target price of 79,000 KRW for LX Hausys.

LX Hausys posted preliminary results for the fourth quarter of last year with sales of 929.2 billion KRW and an operating loss of 2 billion KRW. Despite sales growth in the building materials sector due to the expansion of new housing supply, it recorded its first quarterly operating loss due to cost increases such as a sharp rise in major raw material prices and increased transportation costs.

This year, growth is expected to continue through strengthened targeting of the B2C interior and remodeling market and the effect of expanding premium products. With the establishment of the kitchen and bathroom divisions in the second half of 2021, the company is expected to diversify its package offerings beyond the existing focus on windows and flooring to include kitchens and bathrooms, and expand its flagship stores, a concept of direct stores, from 20 last year to 40 this year.

Additionally, along with its U.S. Easton business, the company’s premium product line, PF insulation materials, is expected to contribute to performance improvement due to increased demand for semi-noncombustible insulation materials following strengthened fire safety regulations and the effect of expanding the 4th production line, scheduled to be fully operational in the second half of 2022 (annual sales scale of about 100 billion KRW).

Kim Ki-ryong, a researcher at Yuanta Securities, analyzed, "Ahead of the presidential election, the feasibility of housing supply expansion and revitalization of sales transactions based on each candidate’s pledges is expected to lead to a favorable environment for the construction and building materials sectors."

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