[Click eStock] "Wuyang, Growth in Home Meal Replacements... Sales Expectations for Second Half"

Mirae Asset Daewoo Report,
Benefits from Expansion of Ready-to-Eat Meal Market and Air Fryer Adoption

[Asia Economy Reporter Minji Lee] Mirae Asset Daewoo forecasted on the 26th that Wuyang could show additional growth considering the increasing demand for home meal replacement (HMR) products and its oligopolistic position in the frozen hot dog market.

Wuyang is a food manufacturing company supplying home meal replacement and beverage bases to large corporations such as CJ CheilJedang and Pulmuone, as well as franchise coffee shops like Starbucks and Ediya.

The HMR market, which was valued at 4 trillion KRW in 2018, is expected to expand significantly to around 10 trillion KRW by 2023. The ownership rate of air fryers is also estimated to have increased sharply from 38% in 2018 to 61% in 2019.

Frozen hot dogs, which account for about 80% of Wuyang’s HMR sales, have benefited from the growth of HMR and the spread of air fryers. Wuyang supplies 80-90% of the hot dog products of CJ CheilJedang and Pulmuone, who dominate the frozen hot dog market. Wuyang’s second hot dog factory, scheduled to be completed in the second half of the year, is expected to drive solid external growth for the company.

Researcher Kyung Minjung of Mirae Asset Daewoo said, “This factory is expected to increase total production capacity by more than three times,” adding, “Profit improvement is also anticipated through efficient factory operation via automation.”

Wuyang has historically posted strong performance in the second half of the year. It is judged that this year as well, favorable external growth will be achieved due to the full-scale sales of new HMR products and increased beverage base sales driven by favorable weather.

In the HMR sector, the cheese ball product launched last year is expected to record high sales growth this year. In addition to cheese balls, frozen noodles scheduled to be launched this year are estimated to accelerate the external growth of the HMR sector. Due to weather effects, the fourth quarter is the peak season for hot dogs.

The beverage base market experienced sluggish sales in the first half due to the impact of COVID-19, but has been recovering since June as the weather warmed. Sales are expected to increase further in the third quarter due to rising demand for fruit beverages.

Researcher Kyung Minjung said, “Continuous benefits for Wuyang are expected from the growth of the HMR market driven by COVID-19 and the spread of air fryers,” adding, “Long-term new market entry is anticipated through increased sales in the high-margin HMR sector and sales under its own brand.”

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