[Click eStock] "Shinsegae Food, The End of a Long Slump Is in Sight"

Shinsegae Food's 'Easy Balance' (Photo by Asia Economy DB)

[Asia Economy Reporter Geum Bo-ryeong] There is a forecast that the long-standing slump of Shinsegae Food will soon come to an end.

According to Daishin Securities on the 5th, Shinsegae Food's consolidated sales in the fourth quarter of last year were 338.7 billion KRW, and operating profit was 5.4 billion KRW. These figures represent increases of 8% and 13%, respectively, compared to the previous year. Although the consolidated performance was sluggish due to the expanded deficit of Smoothie King Korea, a major consolidated subsidiary, the separate sales amounted to 335.2 billion KRW and operating profit was 6.1 billion KRW, marking increases of 8% and 52%, respectively, compared to the previous year.

In the manufacturing service sector, despite continued external growth following the bakery business direction shift, sales slightly decreased due to the reduction of low-profit business sites in the dining out and group catering sectors. Operating profit is expected to improve due to the base effect from the previous year.

Han Yoo-jung, a researcher at Daishin Securities, stated, "This year, Shinsegae Food's consolidated sales are estimated to be 1.3997 trillion KRW, and operating profit 32.8 billion KRW, representing growth of 6% and 48%, respectively, compared to the previous year. The consecutive performance slump in 2018 and last year is coming to an end." She added, "The increase in labor costs due to the minimum wage hike this year is only half of last year's level, and with the full-scale launch of the franchise business within the dining out division in the second half of this year, the profit structure of the dining out sector is expected to improve, thereby strengthening the profitability of the manufacturing service sector. Although the fear of the novel coronavirus infection (Wuhan pneumonia) is expected to shrink the dining out industry in the first quarter, this concern has already been reflected in the stock price, and especially in the first quarter, stable profit growth is expected due to the base effect from the previous year."

On the 4th, Shinsegae Food's closing stock price was 67,500 KRW.

This content was produced with the assistance of AI translation services.