[Click eStock] "Daesang Expected to Meet Market Expectations for Q1 Earnings"

Hana Financial Investment Issues 'Buy' Investment Opinion and Target Price of 33,000 KRW... Closing Price on 2nd at 18,450 KRW

Daesang Cheongjeongwon's product (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] There is an analysis that Daesang's first-quarter performance this year is expected to meet market expectations.

According to Hana Financial Investment on the 3rd, Daesang's first-quarter performance this year is estimated at consolidated sales of 748.6 billion KRW and operating profit of 38 billion KRW. Compared to the previous year, sales increased by 3.5%, while operating profit decreased by 0.3%.

Shim Eunju, a researcher at Hana Financial Investment, stated, "The negative impact of COVID-19 is judged to be limited," adding, "Sales in the processed food sector are expected to be at the previous year's level. Despite high growth in the Home Meal Replacement (HMR) category, the effect of SKU restructuring is expected to offset top-line improvement. However, due to scrapping of deficit items and easing of kimchi promotion competition, food profitability is estimated to improve by 40 basis points compared to the previous year."

She continued, "The combined operating profit of consolidated subsidiaries (PT Indonesia, Bestco) is estimated to be 7 billion KRW, similar to last year," and added, "Since the starch and sugar factory operation rate of 'PT Indonesia' has normalized, the annual profit contribution is expected to be similar to last year."

This year, there is an analysis that Daesang's food sector profitability is worth expecting to improve. It is estimated that the annual food segment margin could improve by 50 basis points compared to the previous year due to restructuring of low-profit processed product SKUs and easing of kimchi promotions. Researcher Shim said, "After the Bestco merger, scrapping of low-profit B2B clients is underway," and "It is expected to have a positive impact on overall profitability improvement."

Hana Financial Investment gave Daesang a 'Buy' investment opinion with a target price of 33,000 KRW. The closing price on the 2nd was 18,450 KRW.

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