Coway sees rosy future as overseas business gains traction

The Coway Experience Center in Kuala Lumpur, Malaysia / Courtesy of Coway

Home appliance maker Coway is enjoying a bright earnings outlook for the second quarter of this year, buoyed by solid growth in its businesses in Malaysia, Thailand, Indonesia and other emerging markets.

According to market tracker FnGuide, Wednesday, brokerages’ consensus for Coway’s second-quarter sales and operating profit stood at 1.22 trillion won ($883.7 million) and 233.1 billion won, respectively, up 12.55 percent and 10.37 percent from a year earlier.

Reflecting the positive appraisal, Coway’s stock price rose 37 percent over the past three months, from 78,600 won on April 23 to 107,700 won on Tuesday. This outpaced the benchmark KOSPI’s 26 percent gain during the same period.

Analysts attribute the rosy outlook to the solid growth in its overseas business. Hanwha Investment & Securities analyst Lee Jin-hyeob expects Coway will likely post 345.1 billion won in sales in Malaysia, up 20 percent from a year earlier.

“There is no disappointment in Coway’s earnings, as the company has been delivering double-digit growth through product diversification and strengthened sales capabilities in Korea and Malaysia, the company’s key markets, once considered to have limited growth potential,” Lee said.

Malaysia is Coway’s flagship overseas market. In the first quarter of this year, the company logged 446.7 billion won in overseas units, with 328.9 billion won coming from Malaysia.

Coway made its entry into the Malaysian market in 2007 with the launch of its water purifier rental business, and has since maintained market leadership. In the first quarter of last year, the number of Coway’s rental and membership accounts in Malaysia reached 3.31 million, up 8.7 percent from a year earlier.

Since last year, the company has expanded its presence in Malaysia by introducing air purifiers, massage chairs and mattresses.

A promotion image of Coway in Thailand featuring actress Chompoo and her daughter Abigail / Courtesy of Coway

Thailand and Indonesia are seen as Coway’s next key growth markets. In the first quarter of this year, the company posted 42.9 billion won in sales in Thailand, up 43.9 percent from a year earlier, driven by a surge in air purifier sales amid growing concerns over ultrafine dust pollution in the country.

Early last year, Thailand faced an alarming rise in air pollution as a protracted dry season led to stagnant air in which pollutants did not disperse normally. The worsening air quality forced 352 schools to close nationwide in January and prompted the government to take emergency measures.

Amid these conditions, the local demand for water purifiers tailored to low water pressure conditions in the region also grew, resulting in improving consumer awareness of Coway’s rental services.

In Indonesia, the country’s steady annual economic growth is driving wider adoption of home appliances such as water and air purifiers. While bottled water has long been preferred due to pollution issues, consumer awareness of water purifiers is gradually increasing, fueling expectations for further growth in Coway’s performance.

“From 2017 to 2018, Coway’s earnings in Malaysia improved significantly as the unfamiliar concept of rental services gained wider traction,” Hanwha’s Lee said. “We believe the company’s Thai unit is now following a similar trajectory, with strong potential to expand its earnings contribution going forward.”

“As global interest in health and wellness continues to rise, demand for environmental home appliances is also growing,” a Coway official said. “We plan to further strengthen our presence in overseas markets through innovative products and locally tailored services.”