[Click eStock] "Hanssem, Positive Mid- to Long-Term Outlook Despite Short-Term Earnings Concerns"

Daol Investment & Securities Report

[Asia Economy Reporter Minji Lee] Daol Investment & Securities maintained a buy rating on Hanssem on the 19th, anticipating a decline in performance due to unfavorable business conditions, and set a target price of 225,000 KRW, which is 28% lower than the previous target.

The company's Q1 B2C segment sales are expected to be sluggish due to a decrease in apartment sales transactions and the failure to renew contracts with about 100 dealerships. The B2B segment is predicted to begin substantial growth due to a sharp increase in order backlog.

Researcher Jinsung Ra of Daol Investment & Securities stated, “It will take time to improve profitability due to rising prices of key raw materials such as PB and MDF, as well as increased fixed costs from expanding store display areas and workforce.” He added, “The two rounds of product price increases have not fully offset the rise in raw material costs.”

According to the company’s mid- to long-term business goals and strategy sharing, the core keyword is ‘construction process innovation.’ The company plans to raise the proportion of direct construction from the current 40% to 100% by 2023, while also shortening the construction period to May 2024. Among the company’s Rehouse customers, the ratio of remodeling due to moving and remodeling while living is 5 to 5, and shortening the construction period is expected to reduce sensitivity to apartment sales transactions.

The home remodeling market is projected to grow from 18 trillion KRW in 2018 to 25 trillion KRW by 2026. The brand market share, which was 30% in 2020, is also expected to expand to 50% by 2030. Based on last year’s sales, the company’s home remodeling division has a market penetration rate of about 5%.

Researcher Jinsung Ra analyzed, “Even without market growth, the home remodeling division can achieve sales growth based on a brand-driven mid- to long-term business strategy.” He added, “However, it is regrettable that there is no specific mention of shareholder value enhancement and capital efficiency measures such as treasury stock cancellation, which were expected after the acquisition.”

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