[Click eStock] "Hanssem, Treasury Share Retirement Is the Only Hope"

On September 22, iM Securities stated that if the ruling party's proposed bill mandating the retirement of treasury shares passes, Hanssem will inevitably have to retire a certain portion of its treasury shares. The company analyzed that this would serve as a catalyst for a rise in share price by enhancing shareholder returns.

The Democratic Party of Korea has decided to push for the passage of a bill mandating the retirement of treasury shares during the regular National Assembly session in September. The core of the bill is to require companies to retire treasury shares immediately upon acquisition or within a maximum of one year, and to mandate the retirement of existing treasury shares within a maximum of five years.

Jang Ho, a researcher at iM Securities, explained, "When reviewing the submitted bills regarding the handling of existing treasury shares, there are some differences in the timeframes, such as within six months, within one year, or within five years, depending on the bill. There are also proposals to delegate the details to a presidential decree." He added, "It is expected that, after further discussions on the handling of existing treasury shares, a unified bill related to treasury share retirement will be prepared and passed during this regular National Assembly session."

As of the end of June, Hanssem's treasury shares accounted for 29.5% of its total shares. Hanssem previously announced that, to enhance shareholder value and strengthen financial soundness, it would consider whether to retire treasury shares by taking into account market conditions, the company's growth potential, and financial capacity.

Researcher Jang commented, "In this environment, if the bill related to the retirement of treasury shares passes, it is inevitable that a certain portion of Hanssem's 29.5% treasury shares will have to be retired, either mandatorily or voluntarily." He added, "The company's share price has continued to underperform due to declining earnings. Therefore, the retirement of treasury shares could serve as a catalyst for a share price increase by expanding shareholder returns."

Meanwhile, Hanssem is expected to have difficulty rebounding in performance this year, given both internal and external conditions. However, the buy recommendation and the target price of 67,000 won were maintained.

Researcher Jang explained, "This year, Hanssem's sales are expected to decrease by 4.4% year-on-year to 1.824 trillion won, and operating profit is expected to decline by 24.4% to 23.6 billion won over the same period. The decline in B2B sales due to reduced housing supply is unavoidable, and the growth of B2C sales, such as in the rehouse and home furnishing segments, is expected to fall short of expectations, making a weak performance inevitable."

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