[Click eStock] "Hansae Yesul, Favorable Market Environment... Top Pick in the Industry"

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[Asia Economy Reporter Kwon Jaehee] Shinhan Financial Investment maintained its 'Buy' rating on Hanse Industrial and raised the target price to 37,000 KRW on the 12th.

This is based on the judgment that despite the burden of rising costs, orders are increasing significantly more than expected, and profit growth driven by exchange rate effects is strong.

Hanse Industrial's performance for the first quarter of this year is expected to record consolidated sales of 483.5 billion KRW and operating profit of 31.4 billion KRW. This represents an increase of 28.7% and 6.6%, respectively, compared to the previous year.

Hyunjin Park, a researcher at Shinhan Financial Investment, analyzed, "Strong U.S. apparel consumption is contributing to sales through large-scale orders from mart buyers. In particular, as the order trend of mart buyers shifts from traditional knitwear to functional clothing, the trend of rising order prices is becoming prominent."

Large-scale orders are increasing mainly from buyers such as Walmart and Kohl's, who experienced significant order declines during the pandemic, and unlike in the past when inventory was minimized, there is a tendency to increase seasonal inventory.

Researcher Park said, "We expected that rising cotton prices and mule costs would limit operating profit growth, but the order momentum is stronger than expected, and price pass-through is also considered feasible."

This trend is expected to continue into the second half of the year. Despite strong demand in 2021, supply shortages persisted due to Vietnam lockdowns and logistics uncertainties. Therefore, it is judged that buyers are likely to increase the volume for this fall season due to a shortage of aged inventory in the second half of this year as well.

Researcher Park stated, "Despite the burden of rising costs, orders are increasing significantly, and along with exchange rate effects, sales and profit growth are expected to be strong," adding, "Hanse Industrial is the top pick within the industry until the first quarter earnings season."

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