[Click eStock] "Pond Group, Expectations for Earnings Growth and Shareholder Returns"

by Jang Hyowon

Published 28 Feb.2024 08:13(KST)

Hana Securities analyzed on the 28th that Pond Group is expected to achieve performance growth through brand diversification and continuous shareholder returns.

Pond Group is a fashion apparel license production and sales specialist company that was listed on the 2nd after a spin-off of the fashion business division of the listed company Cowell Fashion. It absorbed subsidiaries such as 'LNP Brands' and 'Will Fashion,' which accounted for most of the sales within Cowell Fashion. Through license agreements with global brands including Puma and Adidas, it engages in planning, manufacturing, design, and production sales.

Kim Seong-ho, a researcher at Hana Securities, stated in the report on the same day, "Pond Group secured the Asia-Pacific IP of the global casual brand 'Superdry' in March last year and has been actively developing its own brand business." He analyzed, "Superdry currently has about 47 offline stores in 10 Asian countries, and business expansion in the Asian region is underway. With the brand launch scheduled for July, overseas sales growth is expected."

In August last year, Pond Group formed a strategic alliance with Brand Universe, which holds the domestic distribution rights for SPYDER, a sportswear specialist. SPYDER is a brand that had about 110 stores domestically as of 2022 and recorded sales exceeding 80 billion KRW. This is expected to contribute to Pond Group's brand diversification and business synergy in the future.

Shareholder return measures are also anticipated. Researcher Kim Seong-ho analyzed, "Pond Group disclosed shareholder return plans the day before, intending to return 20-30% of net income. Considering that Cowell Fashion maintained a steady dividend payout ratio in the past, future shareholder return policies are expected to mainly consist of cash dividends."

He added, "Despite the exclusion of the handbag business and rental business after the spin-off, sales growth of 48.4% is possible this year due to the full-scale launch of e-commerce and offline brand businesses through brand acquisition and overseas sales growth." He forecasted, "Performance upgrades are possible depending on product sales trends, and although costs for new brands are expected, continuous profitability expansion is anticipated as it separates from the electronics and transportation businesses, which had relatively disappointing profitability."