[THE INVESTOR] Coway has been slow in the fourth quarter last year, said Hana Financial Investment on Feb. 13, downgrading the recommendation to a “hold” from a “buy” and lowering the target price to 100,000 won (US$92.30) from 120,000 won.
Lagging rental business dragged down its operating profit in the period to 103.2 billion won, below market expectations, said analyst Park Jong-dae.
Revenue from rental sector inched up only 5 percent on-year and although exports did increase on the back of strong demand from overseas especially in China, its operating profit ratio fell 17.7 percent as higher-margin units -- including rental and export to overseas entities -- slowed down while costs expanded, explained the analyst.
This year, however, bolstered by growing exports its earnings will continue to improve and revenue will rise 5.7 percent on-year to 2.45 trillion won and operating profit by 7.3 percent to 513.0 billion won, forecast Park.
The possibility of Woongjin Group’s entry into water purifier business is raising the uncertainties of its earnings and until the situation clears, or Coway regains earnings momentum in the first quarter, its stock price rise will be limited, he added.
By Hwang You-mee (firstname.lastname@example.org)