[Click e-Stock] "Hanssem Needs Housing Market Recovery... Investment Opinion and Target Price Lowered"

Investment Rating Downgraded from "Buy" to "Trading Buy"
Target Price Lowered from 70,000 Won to 46,000 Won

On August 22, Shinhan Investment & Securities downgraded its investment opinion on Hanssem from "Buy" to "Trading Buy" and lowered its target price from 70,000 won to 46,000 won, stating that a recovery in the housing market is necessary for a rebound in the stock price.

Kim Sunmi, a researcher at Shinhan Investment & Securities, explained, "The situation is complicated by a sluggish housing market, weakened consumer sentiment, and a shift in consumption trends toward platforms. While strategies such as cost efficiency and increasing the proportion of mid- to high-priced products are yielding some results, it is difficult to offset the cost burden caused by the contraction in scale. Without asset securitization, it will be difficult to maintain high dividends, so short-term momentum is also limited. A recovery in the housing market is a prerequisite for a rebound in the stock price."

In the second quarter of this year, Hanssem posted sales of 459.4 billion won and operating profit of 2.3 billion won, significantly missing market expectations. Researcher Kim analyzed, "Despite improvements in cost of goods sold due to changes in product mix and cost reduction efforts, a decrease in the number of move-in households and sluggish housing transactions led to a decline in home furnishing sales, and the contraction in scale resulted in higher fixed costs, causing poor performance."

Hanssem had initially expected company-wide sales growth of about 5% this year, but there are now doubts about the feasibility of achieving this. Kim commented, "The delayed recovery in the housing market and the tightening of household loan regulations are acting as burdens. Although efforts are being made to reduce sensitivity to market conditions through targeted marketing, there are clear limitations."

Performance is expected to improve somewhat in the third quarter. Kim stated, "Due to a short rainy season and the delay of the Chuseok holiday, operating profit in the third quarter is expected to improve by 24% year-on-year to 9 billion won, but an increase in housing transactions is necessary for performance stabilization. In the current situation, where non-brand influence has grown, the benefit from increased remodeling demand due to reduced new supply will also be limited. Reflecting this, we have revised our earnings estimates downward."

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