[Click e-Stocks] "Handsome Escapes 3-Year Slump...Target Price Raised"

Daishin Securities Raises Handsome Target Price by 25% to 25,000 Won

On February 10, Daishin Securities raised its target price for Handsome by 25% from the previous level to 25,000 won, saying that operating profit increased in the fourth quarter of last year for the first time in three years and that the trend in the first quarter of this year is even stronger.

Yu Junghyun, an analyst at Daishin Securities, said, "In the fourth quarter of last year, Handsome's revenue and operating profit came in at 463.7 billion won (+6% year-on-year) and 27.2 billion won (+30% year-on-year), respectively, beating both our estimate and the market consensus," adding, "As consumption began to recover in earnest from the fourth quarter, Handsome also achieved broad-based growth across its major distribution channels."

The analyst explained, "By channel, Handsome's growth rate was 6% year-on-year for offline and 8% for online, marking meaningful growth in both online and offline channels for the first time in a while."

He went on to say, "The gross profit margin (GPM) fell by 0.1 percentage point year-on-year due to discount sales of older inventories (two years or more), but as most of the discount sales were completed in the fourth quarter, the decline in GPM is also coming to an end," and analyzed, "With revenue returning to a growth trajectory, operating profit turned to growth for the first time in 13 quarters since the second quarter of 2022 (up 30% year-on-year)."

Yu said, "We are now at a stage where improvements in earnings at major domestic industries and the resulting stock market boom and other asset price increases are beginning to translate into higher household disposable income," diagnosing, "Accordingly, domestic apparel consumption has started to recover from the slump of the past three years."

He projected, "So far in the first quarter, Handsome's sales trend appears to be even stronger than in the fourth quarter of last year," and added, "With the discount sales of older inventories now completed, operating profit leverage from revenue growth is expected to expand significantly from this year."

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