[THE INVESTOR] Handsome’s earnings in the fourth quarter last year were seriously disappointing, said Hana Financial Investment on Feb. 9, downgrading the recommendation to a “neutral” from a “buy” and lowering the target price to 34,000 won (US$31.10) from 41,000 won.
Revenue from the period came in at 401.2 billion won and operating profit was 6.4 billion won, both well below market consensus, as it folded Chloe and its own home shopping channel brand Mothan, said analyst Lee Hwa-yeong. He added that the blistering cold slowed down the sales of its coats, a key item for the company, which leant toward lighter, non-padded designs more suited to milder winters.
Operating profits will remain slow in the first half as streamlining imported brands it has launched locally between 2013 and 2015 would incur costs, noted the analyst.
From a longer-term perspective, this will improve its profits and as the brands are folded gradually, the costs will be kept at a minimum, but it cannot be denied that this is a risk for short-term earnings, said Lee.
Although there is a possibility that its earnings will improve from the latter half, the uncertainties will curb any rise in the stock price for the time being, she added.
By Hwang You-mee (firstname.lastname@example.org)