[Alpha Biz= Paul Lee] Eugene Investment & Securities stated on Wednesday that despite weak consumer demand impacting Golfzon’s Q4 2023 earnings, the company’s profitability is expected to improve this year due to a reduction in losses from its deficit-ridden GDR business. The firm maintained a "Buy" rating but lowered its target price from 100,000 KRW to 84,000 KRW. The previous trading day's closing price was 58,400 KRW.
According to Eugene Investment, Golfzon’s preliminary Q4 2023 consolidated earnings showed revenue of 131 billion KRW and an operating profit of 11.1 billion KRW, marking year-over-year declines of 21.3% and 24.6%, respectively. The primary reason for the revenue drop was a 33.0% decrease in franchise business sales compared to the same period the previous year.
The decline in sales of upgraded Golfzon simulators (NX) and reduced rounds played due to weakened consumer sentiment in December contributed to the slowdown. Additionally, GDR business sales dropped by 31.7% year-over-year as store numbers decreased following business restructuring efforts.
Despite the disappointing Q4 results, analyst Park highlighted a positive trend in the growth of franchise locations and cumulative system installations. He also noted an improvement in gross profit margin, attributing it to a reduction in promotional costs for golf simulators, leading to a higher average selling price (ASP) of products like the TwoVision NX.
For Q1 2024, Park projected Golfzon’s revenue at 169.2 billion KRW, down 7.2% year-over-year, while operating profit is expected to rise by 8.0% to 34.2 billion KRW. He emphasized that "profitability improvement is likely to continue, driven by an increase in the ASP of TwoVision NX and a reduction in losses from the GDR business."
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
