Hanwha Investment & Securities maintained its "buy" rating for Kolon and raised its target price to 100,000 won, citing a significant improvement in Kolon Sports China's performance due to the recovery of Chinese consumer spending.
Lee Jin-hyup, an analyst at Hanwha Investment & Securities, reported that Kolon's consolidated revenue for the first quarter reached 1.5188 trillion won, a 5% increase compared to the same period last year, while operating profit surged by 149% to 98.8 billion won. He attributed this strong performance to improved profitability in both Kolon Global's construction sector and Kolon Mobility Group's retail sector.
On a standalone basis, revenue and operating profit were 34.1 billion won and 25.6 billion won, respectively, reflecting decreases of 15% and 20% year-on-year. However, the performance of consolidated subsidiaries showed significant improvement. Kolon Global's operating profit increased by 100% to 21.7 billion won, while Kolon Mobility Group's profit rose by 71% to 20.9 billion won.
Notably, Kolon Sports China exhibited remarkable growth, with first-quarter revenue of 362.8 billion won and net profit of 99.9 billion won, marking increases of 66% and 101% year-on-year, respectively. The net profit margin rose by 5 percentage points to 28%.
Lee noted, "With a solid brand presence in China and the recent recovery of the Chinese consumer market, Kolon Sports China continues to experience high growth, exceeding our previous forecasts."
As a result, Hanwha Investment & Securities has also revised its annual performance outlook for Kolon Sports China, projecting revenue of 1.4724 trillion won and net profit of 335.2 billion won for the year, representing increases of 61% and 98% compared to last year. These estimates are 9% and 11% higher than previous projections.
Lee added, "The current market capitalization of approximately 800 billion won is significantly undervalued. Even when excluding the value of Tissue Jin, there is ample room for further growth based on a conservative NAV calculation that discounts Kolon Sports China's value by 50%."
* This article has been translated by AI.
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