April 26, 2024

• 

[THE INVESTOR] Coway’s earnings shrank and failed to meet analyst estimates in the fourth quarter last year, said Samsung Securities on Feb. 16, lowering the target price to 110,000 won (US$96.94) from 115,000 won. 

The market, however, will be more interested in how fast its earnings will recover from the second quarter and its new mid- to long-term business strategies, said analyst Park Eun-gyeong. The company aims to normalize its rental business fast and is tackling the overseas market aggressively, added the analyst. 

Positive outlook for the market and shareholder returns policy will bolster the stock price at the current level and from the second quarter, its performance will improve and lift the stock price, according to Park.

NH Investment and Securities agreed that the home appliance company will rebound this year, and maintained a “buy” recommendation and 125,000-won target price. 

Its fourth-quarter income was hurt by one-off costs of its ice-making water purifier recall and promotion to reclaim market share, said analyst Han Guk-heui. 

The key factor is the earnings recovery following the elimination of one-time costs, and as the major indicators including the rental sales shows, its business will recover at home and expand overseas, forecast the analyst.

Coway is likely to continue its high dividend rate as its financial investor is practically its largest stakeholder and is spending relatively less considering its cash-generting capacity, added Han.

By Hwang You-mee (glamazon@heraldcorp.com)