[Click eStock] "Pulmuone, Earnings Estimates Revised Upward... Target Price Up"

[Asia Economy Reporter Oh Ju-yeon] Daishin Securities maintained its 'Buy' rating and raised the target price by 17% from the previous 18,000 KRW to 21,000 KRW on the 24th, following the upward revision of Pulmuone's profit estimates for 2020 and 2021.

According to Daishin Securities, Pulmuone's consolidated sales for the second quarter of this year are expected to reach 616.1 billion KRW, and operating profit is forecasted at 14 billion KRW, representing increases of 3% and 30% respectively compared to the same period last year. Additionally, these figures are expected to surpass the previous Daishin Securities estimate of 11.6 billion KRW and the consensus operating profit estimate of 13 billion KRW.

Researcher Han Yoo-jung identified the overseas division as the business segment expected to exceed previous estimates. She explained that the improvement in profitability in the United States is anticipated to surpass expectations each quarter, cost efficiency and strong exports of convenience foods in Japan are promising, and the expansion of key product sales centered on O2O and online channels in China is expected to continue, all of which are positive factors.

On the other hand, the foodservice and dining division (Pulmuone Food & Culture) is expected to fall short of previous estimates. Although traffic at major business sites, which sharply declined due to the COVID-19 pandemic, is recovering compared to the previous quarter, the recovery of dwell time is relatively slow. Reflecting this, the foodservice and dining division's operating loss for the second quarter is estimated to widen by 12.4 billion KRW compared to the same period last year, reaching 8.6 billion KRW.

Researcher Han said, "Although the foodservice and dining division's poor performance in the first half is regrettable, the essence remains unchanged due to the expansion of online channel share and cost reduction trends in the domestic food business improving profitability, the strong performance of the US and China businesses driven by increased demand for protein foods amid rising health awareness, and expectations for financial structure improvement following profit normalization."

She added, "This year is expected to see a turnaround in the overseas division, and 2021 is anticipated to experience significant profit growth due to the normalization of the domestic foodservice and dining division."

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