Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul><li><a href="https://www.smartkarma.com/entities/15584" target="_blank" data-smartkarma-citation="entities:15584:1">Hyundai Livart Co Ltd (079430 KS)</a>, a mid-sized maker and distributor of furniture in Korea, recently clinched a deal with <a href="https://www.smartkarma.com/entities/11383" target="_blank" data-smartkarma-citation="entities:11383:1">Williams Sonoma Inc (WSM US)</a> as the sole franchisee of Williams Sonoma stores in Korea. This is a major deal for Hyundai Livart Co, one that should help its long-term sales and profit growth. Hyundai Livart plans to open 5-6 Williams Sonoma stores in 2017 and about 30 stores over the next decade in Korea. In this business relationship, Hyundai Livart purchases various Williams Sonoma home furnishing products and Hyundai Livart sells this in Korea as its exclusive franchisee. </li><li>The home furnishing market is a big industry in Korea. It was estimated to be about 11.2 trillion won (US$10 billion) in 2016. One of the key attractions of having Williams Sonoma stores in Korea is that it is a well-known home furnishing brand among many Koreans, especially those that have visited the US. Because it is difficult to purchase home furnishing items when one is traveling in the US and bring them back to Korea because they are bulky and may break, having Williams Sonoma stores in Korea will make it more convenient for Korean consumers to purchase these home furnishing items.</li><li>If we conservatively assume a 10% discount to the consensus net profit estimate of 48.6 billion won in 2018 (44 billion won), and apply the same 14x P/E multiple (Hyundai Livart shares are trading at 14x 2016 net profit estimate righ now), this would result in a price target of 36,000 won, which is nearly 29% upside from current levels. In addition, we believe that the company has a strong potential to slightly improve its profit margins with the premium Williams Sonoma branded products, which could increase the valuation multiples on Hyundai Livart.</li><li>Other major domestic competitors in the home furnishing market in Korea - In addition to the competitors such as Hanssem, Fursys, and IKEA, there are other major competitors including Jaju (part of <a href="https://www.smartkarma.com/entities/4454" target="_blank" data-smartkarma-citation="entities:4454:1">Shinsegae International Co (031430 KS)</a>, Modern House (part of Newcore Department Store), Zara Home (part of Zara), and Muji (part of Lotte Department Store).</li></ul>

Hyundai Livart Co Ltd (079430 KS), a mid-sized maker and distributor of furniture in Korea, recently clinched a deal with Williams Sonoma Inc (WSM US) as the sole franchisee of Williams Sonoma stores in Korea. This is a major deal for Hyundai Livart Co, one that should help its long-term sales and profit growth. Hyundai Livart plans to open 5-6 Williams Sonoma stores in 2017 and about 30 stores over the next decade in Korea. In this business relationship, Hyundai Livart purchases various Williams Sonoma home furnishing products and Hyundai Livart sells this in Korea as its exclusive franchisee. The home furnishing market is a big industry in Korea. It was estimated to be about 11.2 trillion won (US$10 billion) in 2016. One of the key attractions of having Williams Sonoma stores in Korea is that it is a well-known home furnishing brand among many Koreans, especially those that have visited the US. Because it is difficult to purchase home furnishing items when one is traveling in the US and bring them back to Korea because they are bulky and may break, having Williams Sonoma stores in Korea will make it more convenient for Korean consumers to purchase these home furnishing items.If we conservatively assume a 10% discount to the consensus net profit estimate of 48.6 billion won in 2018 (44 billion won), and apply the same 14x P/E multiple (Hyundai Livart shares are trading at 14x 2016 net profit estimate righ now), this would result in a price target of 36,000 won, which is nearly 29% upside from current levels. In addition, we believe that the company has a strong potential to slightly improve its profit margins with the premium Williams Sonoma branded products, which could increase the valuation multiples on Hyundai Livart.Other major domestic competitors in the home furnishing market in Korea - In addition to the competitors such as Hanssem, Fursys, and IKEA, there are other major competitors including Jaju (part of Shinsegae International Co (031430 KS), Modern House (part of Newcore Department Store), Zara Home (part of Zara), and Muji (part of Lotte Department Store).

Hyundai Livart - Beneficiary of Williams Sonoma's Expansion in Korea

United States

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Williams Sonoma (WSM US)

Hyundai Livart - Beneficiary of Williams Sonoma's Expansion in Korea

Hyundai Livart Co Ltd (079430 KS), a mid-sized maker and distributor of furniture in Korea, recently clinched a deal with Williams Sonoma Inc...

Douglas Kim

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52-week Range

Market Cap (USDm)

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