[Click e-Stock] "Challenging Business Environment"... Target Price Lowered from 15,000 to 13,000 Won for This Stock

SK Securities has lowered its target price for Hansae Co., Ltd., an apparel export company, from 15,000 won to 13,000 won. However, the brokerage maintained its buy rating.

On May 19, Hyung Kwonhoon, an analyst at SK Securities, stated, "The business environment remains challenging," but added, "All negative factors are expected to be reflected this year, and earnings growth is anticipated from next year."

Analyst Hyung noted, "Major orders from supermarket buyers are expected to remain sluggish in the second quarter of this year," and explained, "Due to the war between the United States and Iran, both oil and synthetic fiber prices have surged, leading to increased raw material and transportation costs."

He continued, "The apparel retail inventory-to-sales ratio in the United States is currently at 2.09, which is historically very low," but added, "Since buyers are maintaining inventory policies that minimize stock holdings and extend short lead times, a rapid recovery in restocking demand in upstream industries is unlikely in the short term."

In the first quarter of this year, operating profit was 10.5 billion won, falling significantly short of the forecast of 20 billion won. Analyst Hyung explained, "The operating margin declined by 2.1 percentage points, affected by margin pressure from increased tariff burdens and a decrease in order volume, and bad debt expenses related to accounts receivable rose by 3 billion won."

He stated, "In dollar terms, garment sales decreased by 3%," and added, "While order volumes from low-priced supermarket buyers continued to decrease, order volumes for high-priced brands such as Carhartt and Aeropostale increased, resulting in a trend of rising average selling prices (ASP) and declining shipment volumes." He further analyzed, "In dollar terms, fabric sales grew by 40%, which was due to maintained internal sourcing volumes and the expansion of external sales as major buyers adopted designated fabrics."

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