(사진= 한세실업 홈페이지)

[Alpha Biz=(Chicago) Reporter Kim Jisun] Clothing stocks, which account for a high proportion of exports to North America, have been lowered due to concerns over worsening performance due to the weak dollar.

Shares of Youngone Trading and HANSAE, South Korea's leading clothing original equipment (OEM) companies, have been on the decline since mid-November last year when concerns over a rise in won prices began in earnest.

According to the Korea Exchange on the 24th, the stock price of Youngwon Trading plunged 10.71% as of the 20th compared to mid-November last year. Shares of HANSAE also fell 1.49 percent over the same period.

Securities firms have also lowered their target stock prices one after another. NH Investment & Securities lowered its target price of Youngwon Trading by 9% from 70,000 won to 64,000 won. 

 

Daishin Securities lowered its target price of Youngwon Trading by 5% from 80,000 won to 76,000 won. HANSAE's target stock price was also set at 21,000 won, down 9% from the previous year. Hana Securities lowered its target stock price from 23,000 won to 21,000 won.

Clothing stocks are on the decline as sales and operating profit are expected to be hit this year as the dollar turns weak. 

 

OEM companies that take orders from global clothing brand companies and produce and export clothing see their sales decrease when the won rises (drop in the exchange rate) per dollar because most of their sales are paid in dollars. 

 

Moreover, since raw and subsidiary materials are pre-ordered in dollars about two months ago, the cost burden will inevitably increase when the dollar weakens as it is now.

As global demand for clothing is expected to decline this year due to the economic slowdown, expectations that clothing stocks' performance will worsen in the first quarter also affected the fall in stock prices. 

 

According to financial information provider FnGuide, Youngwon Trading's operating profit in the first quarter of this year is expected to fall 11.03% year-on-year to 129.8 billion won. HANSAE's operating profit is expected to plunge 36.49% in the first quarter of this year from a year earlier.

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