[Click eStock] "KG Inicis, Expected 25% Operating Profit Growth This Year"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating on KG Inicis on the 1st, expecting an increase in earnings, and set a target price of 30,800 KRW.

KG Inicis's expected sales for this year are 1.1 trillion KRW, which is anticipated to increase by 15.8% compared to the same period last year. Operating profit is projected to grow by 25% to 107.7 billion KRW.

Jeonggi Lee, a researcher at Hana Financial Investment, explained, "Despite the impact of the novel coronavirus (COVID-19), first-quarter sales are expected to increase by 5% compared to the same period last year," adding, "With increased demand from the main customer group, the travel industry, significant sales growth is expected from the second quarter."

KG Inicis is expected to achieve over 20% sales growth in 2020 through securing new franchise stores and expanding global franchise partnerships. Additionally, its subsidiary KG Mobilians is projected to see profit growth this year due to the increase in mobile phone micropayment limits and the merger of subsidiaries.

The company's expected first-quarter sales are 239.4 billion KRW, an increase of 4.9% compared to the same period last year. Operating profit is expected to grow by 9% to 22.9 billion KRW despite the poor performance of subsidiaries KFC Korea and KG Eduwin. Separately, operating profit is estimated to reach 12.1 billion KRW, a 16% increase driven by rising demand in the food service, delivery, and content sectors.

Researcher Jeonggi Lee stated, "A discount rate was applied to the target price due to group risk expansion from indiscriminate mergers and acquisitions and poor performance of subsidiaries (such as KFC Korea and KG Eduwin)," adding, "As these issues enter a resolution phase, the corporate value discount rate is also expected to decrease."

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