SK Securities noted that the allure of original equipment manufacturing (OEM) is becoming apparent for outdoor specialist Youngone. It raised its target price from 52,000 won to 62,000 won and recommended a 'buy' rating. Youngone's stock closed at 49,850 won on the 18th.
On the 19th, Hyung Gwon-hun, a researcher at SK Securities, diagnosed that "Youngone has the most neutral position regarding the impact of U.S. tariff policies within the OEM coverage."
The likelihood of tariffs being imposed on clothing in Southeast Asia is low, but it is a negative factor in terms of investment uncertainty. Research Institute Hyung stated, "Youngone's positioning regarding tariffs is an aspect that raises its attractiveness as a defensive stock."
Due to tariff issues, consumer sentiment in the U.S. is expected to weaken in the first half of the year, while European consumption is anticipated to remain relatively strong. Research Institute Hyung said, "Youngone's sales proportion towards Europe is higher compared to other companies, making its regional sales mix attractive."
The fact that it has strong growth brands with high brand loyalty, such as The North Face, Lululemon, and Arc'teryx, as major clients is also positive.
SK Securities forecasts that Youngone's annual revenue for this year will be 3.9381 trillion won, with an operating profit of 449.3 billion won. Research Institute Hyung stated, "In the case of the OEM institutional sector, dollar sales are expected to grow by 8.4% in the first half and 4.6% in the second half, leading to an annual growth of 6.3%."
He added, "Since last year's increase in the minimum wage in Bangladesh was reflected in costs from the beginning of the year, profit is expected to grow alongside revenue growth this year."
Youngone's bicycle brand, Scott, significantly struggled with operating profit last year due to excess inventory depletion. Inventory is estimated to be around 500 billion won as of the end of last year.
Research Institute Hyung remarked, "After further inventory depletion, inventory levels are expected to approach normal levels by the end of the first half, and assuming the inventory problem is resolved in the second half, the operating loss of Scott will decrease by 155.3 billion won."