Steep Earnings Growth since Apr 2022
The author is an analyst of NH Investment & Securities. He can be reached at jack.baek@nhqv.com. -- Ed.
Gamsung Corp has been reporting steep earnings growth since Apr 2022, the first month of re-opening. Snow Peak Apparel logged strong 1Q22 earnings, with sales of W12bn (+272% y-y). In 2022, average monthly sales are forecast at around W8bn. Further earnings growth is anticipated to sustain throughout next year on the back of store expansion centered on department stores and agencies, the company’s main sales channels.
Raise annual sales estimate for Snow Peak Apparel
Having achieved steep earnings growth in 2021 with sales of W35.8bn (+551% y-y), Snow Peak Apparel should see sales further climb to W90.0bn (+151% y-y) this year. Our annual sales estimate for the brand is hiked from W67.0bn in light of higher-than-expected monthly sales thus far in 2022.
The Snow Peak Apparel brand specializes in apparel for camping, which has enjoyed rapid demand growth amid the pandemic. We anticipate that brisk earnings growth will continue even after the endemic phase, given the robust sales trend from April, when social distancing was first lifted. In 1Q22, Snow Peak Apparel sales came to W12bn (272% y-y), and we expect the figure to jump once more to W20bn (+206% y-y, monthly average of W7bn) in 2Q22. In particular, the number in May should reach an all-time monthly high of W7.5bn.
In May 2021, the brand’s number of locations at the three major domestic department stores (Lotte, Shinsegae, and Hyundai) totaled 36, but that figure has nearly doubled to 67 as of May 2022. Further expansion in the number of locations (including those at department stores as well as agency stores) is planned throughout 2H22 as well. The firm is aiming for 2023 Snow Peak Apparel sales of W140bn, leaving ample room for further growth afterwards, as that figure represents only 40% of the average sales for major outdoor brands.
Attractively valued, with 2023F P/E of 7.8x
We estimate Gamsung Corp’s 2022E sales at W104.2bn (+113.0% y-y) and OP at W10.4bn (+797.8% y-y), anticipating ongoing rapid OPM improvement following the company’s 2021 turnaround. Currently, Snow Peak Apparel’s rapid growth continues, and the firm remains attractively valued with its shares trading at a 2023F P/E of 7.8x.