PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩206 per share · Prices as of the 2026-10-02 close
Hwaseung Industrial, a core footwear ODM partner of the Adidas group, has shown an earnings recovery trend since 2025 alongside the brand's demand rebound, though revenue and operating profit still trail 2024 levels.
2025 consolidated revenue of KRW 1.781 trillion and operating profit of KRW 76.6 billion both declined year-on-year, but the company remained clear of the net loss recorded in 2023.
Following a net loss of KRW 4.9 billion in Q2 2025, the company returned to profit from Q3, recovering to KRW 17.9 billion in Q4, before slowing again in Q1 2026, reflecting large quarter-to-quarter volatility.
Key client Adidas posted consecutive double-digit growth in Q1 and Q2 2026 and raised its full-year revenue growth guidance to 9-10%.
2025 operating cash flow surged to KRW 180.0 billion from KRW 97.0 billion a year earlier, diverging from the decline in net income.
The debt ratio eased slightly to 185.0% in 2025 from 193.6% in 2024, but remains elevated.
Hwaseung Industrial operates footwear ODM (original design manufacturing) and precision chemicals businesses as a holding-style affiliate of the Hwaseung Group, dividing its operations broadly into footwear, chemical, and trading segments.
The footwear segment conducts overseas footwear ODM production, holding status as one of Adidas group's so-called 'Big 5' partners, with over 40,000 workers producing footwear at plants in Vietnam, China, and Indonesia for brands including Adidas and Reebok.
The chemical segment produces precision chemical products such as raw materials and components for shoe sole processing, synthetic resins, adhesives, and films, sold to affiliates and external customers.
The trading segment handles integrated procurement of raw materials and textiles along with general trading activities.
The Hwaseung Group also operates separate listed and unlisted affiliates in automotive parts (Hwaseung R&A, among others), materials (Hwaseung Materials), and sports/fashion ODM (Hwaseung Enterprise, Hwaseung Crown), with Hwaseung Industrial serving as the group's flagship entity for footwear and chemicals.
In terms of competitive landscape, the global footwear ODM industry competes against large Taiwan-based manufacturers such as Pou Chen and Yue Yuen, with cost competitiveness and production efficiency via smart factories serving as key competitive factors.
The company also carries relatively high dependence on Adidas among its customer base, making its results closely tied to the demand cycle of that single brand.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩443.5B | ₩19.5B | 4.4% |
| 2025Q3 | ₩405.1B | ₩9.1B | 2.2% |
| 2025Q4 | ₩447B | ₩24.3B | 5.4% |
| 2026Q1 | ₩408.2B | ₩8.5B | 2.1% |
| 2026Q2 | ₩458.2B | ₩21.7B | 4.7% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩1.9T | ₩73.3B | ₩900M | 3.8% | 0.2% | 169.8% |
| 2023 | ₩1.5T | ₩24.7B | -₩25B | 1.7% | −7.9% | 169.4% |
| 2024 | ₩1.9T | ₩118.2B | ₩39.1B | 6.3% | 11.1% | 193.6% |
| 2025 | ₩1.8T | ₩76.6B | ₩19.3B | 4.3% | 5.8% | 185.0% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23
2025 consolidated revenue came to KRW 1.781 trillion, down from KRW 1.868 trillion in 2024, while operating profit fell to KRW 76.6 billion from KRW 118.2 billion, pushing the operating margin down from 6.3% to 4.3%.
Net income attributable to owners was KRW 19.3 billion in 2025, down from KRW 39.1 billion in 2024, yet still positive compared with the net loss attributable to owners of KRW 25.0 billion in 2023.
Looking at the multi-year pattern, the company moved from a modest profit in 2022 (operating margin 3.8%, owners' net income around KRW 0.9 billion) into a loss in 2023, followed by a sharp recovery in 2024 and renewed softening in 2025.
On a quarterly basis, Q2 2025 revenue reached KRW 443.5 billion with operating profit of KRW 19.5 billion, yet owners' net income posted a loss of KRW 4.9 billion; Q3 revenue fell to KRW 405.1 billion but net income turned positive at KRW 1.3 billion.
Q4 showed clear recovery with revenue of KRW 447.0 billion, operating profit of KRW 24.3 billion, and net income of KRW 17.9 billion.
However, Q1 2026 slowed again to revenue of KRW 408.2 billion, operating profit of KRW 8.5 billion, and net income of KRW 2.0 billion, before improving once more in Q2 2026 to revenue of KRW 458.2 billion, operating profit of KRW 21.7 billion, and net income of KRW 8.5 billion, underscoring significant quarter-to-quarter volatility.
Meanwhile, 2025 operating cash flow jumped to KRW 180.0 billion from KRW 97.0 billion in 2024, contrasting with the decline in net income, which can be interpreted as an effect of working-capital management involving inventory and receivables.
The debt ratio improved slightly to 185.0% in 2025 from 193.6% in 2024, but remains elevated compared with the 169% range seen in 2022-2023.
The global sportswear industry is showing an improving trend as Adidas, which had shrunk to near break-even levels in 2023, entered a normalization phase in earnings between 2024 and 2026.
Adidas reported currency-neutral revenue growth of 14% year-on-year in Q1 2026, and again 14% in Q2, reaching a record quarterly revenue of €6.7 billion. On the back of this, Adidas raised its full-year 2026 revenue growth guidance from high single digits to 9-10%.
By category, the Performance segment including running and football led growth, while apparel outpaced footwear growth, revealing some imbalance across categories.
This recovery in demand from the parent brand carries potential to positively feed through to the production volumes and results of ODM partners such as Hwaseung Industrial.
That said, the footwear ODM industry faces constant competition from large Taiwan-based manufacturers, and cost burdens fluctuate frequently with labor costs, raw material prices, and currency movements including the Vietnamese dong and Indonesian rupiah.
Adidas has also set targets for high single-digit revenue growth and an operating margin near 10% for 2027-2028, a variable that could affect order allocation to partners over the medium term.
In its Q2 2026 earnings release, Adidas stated that first-half (January-June) currency-neutral revenue rose 14% to €13.3 billion, and raised its full-year guidance accordingly—a key point of interest being how this improvement in parent-brand demand feeds through to Hwaseung Industrial's production allocation and revenue trajectory going forward.
Specific segment-level revenue guidance or capacity expansion plans from the company itself were not identified in publicly available materials as of this review, warranting confirmation through future regular disclosures and IR materials.
Whether the earnings-recovery pattern that repeatedly appeared in Q4 2025 and Q2 2026 continues into the second half, or slows again as it did in Q1 2026, stands as the key point to watch in coming quarterly results.
Whether the sharply improved 2025 operating cash flow persists is also a factor to monitor from a financial-stability standpoint. Continuation of the modest downward trend in the debt ratio, which has stayed above the 190% range for two consecutive years, is another item to watch.
If Adidas's stated targets of high single-digit revenue growth and a roughly 10% operating margin for 2027-2028 materialize, this could create a more favorable environment for footwear ODM partners' order volumes, though it should be noted these are the parent brand's own targets, not confirmed guidance from Hwaseung Industrial itself.
The current share price trades at a substantial discount to the company's net asset value, positioning it below book value.
On the earnings side, trailing four-quarter net income has recovered to a level exceeding the full 2025 annual figure, placing the market-implied earnings multiple in a lower range compared with the prior loss-making period.
Dividends have been paid annually, though the yield level is not notably above the sector average, worth noting for context. That said, the debt ratio has remained persistently elevated, so a lower multiple relative to net assets should not necessarily be read as a sign of ample financial flexibility.
Specific target prices or investment ratings may vary by brokerage, and this report does not present a directional view.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23
Key customer Adidas posted consecutive double-digit revenue growth in Q1 and Q2 2026 and raised its full-year guidance to 9-10%. This expanded demand from the parent brand carries potential to positively feed through to the production volume allocated to footwear ODM partner Hwaseung Industrial.
However, whether this actually translates into greater order volumes and improved profitability needs to be confirmed through the company's future results.
2025 operating cash flow surged to KRW 180.0 billion from KRW 97.0 billion in 2024, a divergence from the decline in net income over the same period. This suggests a possible improvement in working-capital efficiency involving inventory and receivables. Improved cash generation can help ease financial burden under the company's elevated debt ratio.
After posting a net loss attributable to owners in 2023, the company recovered sharply in 2024, and even as profit shrank in 2025 it remained in positive territory. Quarterly data also show a pattern of returning to profit from Q3 2025 following a Q2 loss. This indicates the business has moved away from a fully loss-making state.
2025 consolidated revenue fell to KRW 1.781 trillion from KRW 1.868 trillion in 2024, and operating profit shrank to KRW 76.6 billion from KRW 118.2 billion. The operating margin also declined from 6.3% to 4.3%. Q1 2026 operating profit slowed again to KRW 8.5 billion, showing the recovery has not been consistent.
The debt ratio stood at 185.0% in 2025, still elevated and higher than the 169% range seen in 2022-2023. This structure means interest burden or financing costs could influence net income volatility. The pace of debt-ratio improvement has also been gradual, worth watching.
Results swung sharply from a net loss of KRW 4.9 billion in Q2 2025 to a profit of KRW 17.9 billion in Q4, before falling back to KRW 2.0 billion in Q1 2026, showing large quarter-to-quarter dispersion. Such volatility can stem from a combination of seasonality, one-off factors, and currency effects. This lower predictability is a factor worth noting when assessing the company.
Footwear segment revenue depends heavily on the Adidas group, directly exposing results to that single brand's demand cycle or order policy changes. Adidas itself has acknowledged facing challenges including tariffs, currency effects, and market-share competition with rival brands. The impact of any change in the parent brand's policy on partner order allocation warrants ongoing monitoring.
As the company operates production bases in Vietnam, China, and Indonesia, fluctuations in local currency exchange rates, labor costs, and raw material prices (synthetic resin, rubber, and others) directly affect costs. Won-dollar exchange rate movements can also affect export profitability. These variables have contributed to quarterly earnings volatility.
The debt ratio of 185.0% in 2025 is among the highest of the four years reviewed, raising the possibility of increased financing cost burden from interest rate changes or shifts in borrowing conditions.
With net income volatility already elevated, high leverage can relatively weaken the company's ability to defend earnings. Ongoing monitoring of debt ratio and borrowing structure changes through future regular disclosures is warranted.
The regulatory deadline for the Q3 2026 quarterly report filing, a point to check via revenue, operating profit, and net income figures whether the Q2 recovery trend continued into Q3.
Based on the historical release pattern, Adidas's Q3 earnings report is expected around this time, a point to check whether upstream demand growth and full-year guidance are maintained.
Won-dollar and won-dong (Vietnam) exchange rates along with synthetic resin and rubber price trends should be checked to assess changes in cost burden.
A point to confirm through financial statement disclosures whether the debt ratio and borrowing structure are changing, and whether the 2025 improvement in operating cash flow is sustained.
Hwaseung Industrial, as a core footwear ODM partner of the Adidas group, is pursuing an earnings recovery in tandem with the parent brand's demand rebound during 2025-2026.
However, 2025 consolidated revenue and operating profit both declined from 2024, and quarterly volatility has been pronounced, with profit slowing again in Q1 2026 before recovering in Q2.
The sharp improvement in 2025 operating cash flow is a positive, but the debt ratio remains elevated at 185.0%, indicating financial burden has not been fully resolved.
Adidas's upward revision of its 2026 full-year guidance to 9-10% growth suggests a favorable environment for partner order volumes, but it should be noted this is the parent brand's own target rather than confirmed guidance from Hwaseung Industrial itself.
Customer concentration, currency and raw material volatility, and high leverage remain factors requiring continued observation. Investment judgment should be formed by continuously monitoring future quarterly results and changes in financial structure.
Report written 2026-09-05 · Data as of 2026-09-04
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