Eugene Securities analyzed on the 31st that although Youngone faces overall sluggishness in the clothing industry and tariff risk with the U.S., it has excellent clients, which enables potential growth in performance. It subsequently raised the target price from the previous 55,000 won to 70,000 won, maintaining a 'buy' investment opinion. The closing price of Youngone on the previous trading day was 60,600 won.
Eugene Securities projected that in the second quarter of this year, Youngone's sales and operating profit would rise by 6.1% and 7.3% year-on-year, respectively, reaching 947.1 billion won and 178.6 billion won.
Lee Hae-ni, a researcher at Eugene Securities, said, "Youngone can grow compared to the previous year as the base burden from its original equipment manufacturer (OEM) business and SCOTT's business is very low until the first half, despite domestic and international uncertainties." The tariff on Youngone's main production site in Vietnam has decreased from 46% to 20%, while Bangladesh's tariff remains around 35%, but negotiations are ongoing.
It was projected that OEM sales would increase by 8.9% during the same period to 658.2 billion won, while operating profit would rise by 3.9% to 183.6 billion won. Eugene Securities noted that while the performance growth of major clients such as Lululemon and VF has decreased, Armorsports (Arc'teryx) continues to maintain a high growth trend.
This researcher explained, "The average won-dollar exchange rate in the second quarter is 1,401 won, applying the effect of a 2% increase compared to the same period last year," adding, "However, the exchange rate base could become a burden as we move into the second half."
In the case of SCOTT, it was estimated that sales would reach 240.3 billion won with an operating loss of 26.7 billion won during the same period. This researcher noted, "Due to the sluggish bicycle market, deficits will continue, but the excess inventory will decrease compared to the second half of last year (175.5 billion won loss), potentially reducing the deficit size."
He continued, "With the ownership of excellent buyers compared to the industry's comparable listed companies, the applied price-to-earnings ratio (PER) has been raised," and added, "Thus, the target stock price has been set to 70,000 won."