Hanwha Investment & Securities projected on July 15 that Coway will achieve record growth in rental accounts for the second quarter, maintaining its target price at 150,000 won and a 'buy' rating.
Lee Jin-hyup, a researcher at Hanwha Investment & Securities, stated, "Coway's consolidated revenue for the second quarter is expected to reach 1.4221 trillion won, a 13% increase from the same period last year, while operating profit is projected to rise 8% to 262.3 billion won, aligning with market expectations." He added that the net increase in rental accounts is anticipated to reach 200,000, marking a 27% year-on-year increase and the highest quarterly performance to date.
Lee noted that despite a decrease in accounts reaching ownership, rental sales have remained stable compared to the previous year, leading to a significant increase in net accounts. He explained that due to the nature of lease accounting, sales volume greatly impacts revenue growth, but actual cash flow is determined by the net increase in rental accounts and the total number of accounts. He also assessed that concerns over rising customer acquisition costs have not negatively affected profitability in this quarter, similar to the previous one.
The overseas business is also expected to support performance improvements. The Malaysian subsidiary is projected to see revenue of 433.7 billion won and operating profit of 83.4 billion won in the second quarter, reflecting increases of 22% and 23%, respectively, compared to the same period last year, bolstered by strong sales of water purifiers and the successful introduction of new product lines such as mattresses and air conditioners. Thailand is also expected to add 30,000 to 40,000 accounts, achieving approximately 35% growth.
Lee remarked, "Coway's differentiated competitiveness is evident in its ability to defend rental sales despite the decrease in accounts reaching ownership. While domestic growth has somewhat slowed, Malaysia and Thailand continue to grow at rates of over 20% and 30-40%, respectively, supporting overall company performance."
He added, "In addition to solid fundamentals, the major shareholder Netmarble has recently announced plans to purchase an additional 50 billion won in shares, following a previous 40 billion won acquisition, indicating positive factors from a supply and demand perspective. This is part of a total plan to buy back 150 billion won worth of shares over the next year."
* This article has been translated by AI.
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