[Click e-Stock] "Hyundai Livart: Cost Improvement Efforts Amid Downturn... Target Price Raised"

"Cost Ratio Improvement Despite Construction Market Slump"
"Interior Business Grows Amid B2B Downturn"

According to analyses from securities firms, Hyundai Livart, the furniture and interior specialist under Hyundai Department Store Group, is raising expectations for profitability through cost reduction efforts despite the sluggish market environment.

On the 13th, Heungkuk Securities reported that analyst Jeongyeon Choi stated the previous day, "We have reflected the cost improvement results by business segment and the reduction in the number of outstanding shares due to the retirement of treasury shares," maintaining a 'Buy' investment opinion on Hyundai Livart and raising the target price from 8,500 won to 9,000 won.

In the first quarter of this year, Hyundai Livart recorded sales of 355.9 billion won (down 18.7% year-on-year) and an operating profit of 1.1 billion won (down 88.9%). Analyst Choi explained, "The downward trend in sales has continued since the first quarter of 2024 due to a slump in the construction and housing markets. However, by improving costs company-wide to counter the sales decline, the gross profit margin has been improving."

By business segment, B2C (business-to-consumer) furniture sales reached 76.9 billion won, a 15% decrease from the same period last year, due to fewer new move-ins and weakened consumer sentiment. B2B (business-to-business) furniture and raw materials sales amounted to 137.2 billion won (down 29% year-on-year) due to the slump in the construction market, but the company is continuing to focus on profitability by enhancing order cost management and avoiding low-price bidding.

Analyst Choi added, "The B2B business segment has found a bottom despite the decline in overseas temporary sites. New orders have begun, such as the Iraq CSSP temporary construction project, and notably, the new B2B interior projects, which supply furniture and lighting, were the only segment to achieve positive growth this quarter."

For the full year, sales are estimated to be 1.5041 trillion won (a 2.7% decrease year-on-year), with operating profit expected to reach 17.7 billion won (a 12.5% increase year-on-year). Analyst Choi commented, "While the B2B market remains difficult due to the slowdown in new housing supply, we believe the B2C market has passed its lowest point. Strategies focusing on profitability improvement, distribution network restructuring, and resumption of overseas temporary projects are expected to deliver significant results when the market recovers," he added.