[Click eStock] "Golfzon, Overseas Growth Needs Verification... Target Price Down"

Shinhan Investment Corp. downgraded the target price for Golfzon from 110,000 KRW to 92,500 KRW on the 5th, stating that confirmation of overseas growth is necessary. The investment rating was maintained as 'Buy.'

Researcher Byunghwa Lee of Shinhan Investment Corp. said, "We took a conservative approach to overseas sales estimates, adjusting the average overseas sales growth rate from 33.6% to 17.3% for 2024-2025," adding, "The lowered earnings expectations have already been reflected in the stock price, and it is now time to wait for the sales growth period in key overseas markets."

Golfzon's third-quarter earnings this year recorded sales of 146.2 billion KRW, down 14% year-on-year, and operating profit of 27.5 billion KRW, down 0.2%. Lee said, "Sales were 14.9% below our estimates, while operating profit exceeded estimates by 5.4%. There was a significant gap between the actual and estimated figures in the overseas sales segment."

The most important point in the third-quarter results is cost improvement. Lee explained, "Cost of sales fell 25.3% year-on-year and 18.6% quarter-on-quarter. Although sales decreased 14.0% year-on-year and 9.1% quarter-on-quarter, the gross profit margin improved by 6.1 percentage points year-on-year due to price increases for new screen golf products and a reduction in losses from GDR (indoor practice ranges)."

There is a high possibility of stock price revaluation if overseas growth is confirmed. Lee stated, "Expectations for new market development of Golfzon Park in Japan remain valid, and the U.S. has sufficient growth potential for golf simulators," adding, "Upon confirmation of overseas growth, the 2025 price-to-earnings ratio (PER) is expected to be 5.2 times, increasing valuation attractiveness and making stock price revaluation highly likely."

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