NH Investment & Securities evaluated on the 5th that Handsome lacks growth potential, making it difficult for its stock price to rebound. The investment opinion remains 'neutral (Hold)', and the target stock price has been lowered to 17,000 won. Handsome's closing price the previous day was 15,730 won.
Handsome recorded an earnings shock in its second quarter earnings announcement this year. The consolidated revenue for Handsome in the second quarter of this year was 338.1 billion won, and the operating profit was 700 million won. These numbers represent declines of 1% and 82%, respectively, compared to the same period last year. In the case of operating profit, it significantly underperformed the consensus market estimate of 3.8 billion won.
Jeong Ji-yun, a researcher at NH Investment & Securities, noted, 'With an operating profit margin of 0.2% in the second quarter, margin erosion continued,' adding that 'the rise in the share of discount sales of high-end brands and out-of-season inventory was due to sluggish domestic consumption, and the expansion of imported edit shop lines led to an increase in cost ratios, which are the main factors.'
Researcher Jeong explained regarding Handsome, 'It is still lacking in growth potential, so it is advisable to approach after confirming a sales rebound through the escape from domestic markets and the reinforcement of the brand.'
However, it was considered that the potential for share buybacks and additional equity purchases by the largest shareholder is stabilizing the downward pressure on the stock price.
Researcher Jeong stated, 'The intention for shareholder return has been expressed, and a cumulative shareholder return rate of 35% is planned from last year until 2027,' adding that 'more than 15% of the separate operating profit will be utilized for dividends, and in January of this year, 960,753 shares were burned.'
Additionally, Hyundai Home Shopping, the largest shareholder of Handsome, has purchased 330,000 shares of Handsome on the market for the purpose of strengthening responsible management, and it was added that there is a possibility of further acquisitions.