[Post-IPO]⑨ Bifido, Will There Be a V-Shaped Earnings Recovery This Year?

[Asia Economy Reporter Hyunseok Yoo] Bifido, famous for 'Jigeunok Bifidus,' was expected to benefit from the rapidly growing domestic probiotics market at the time of its listing. However, due to intensified market competition and other factors, it did not grow as much as anticipated. The company plans to strengthen its business by enhancing marketing and launching new services starting in the second half of the year.

Bifido was established in 1999. Based on research on bioactive Bifidobacterium, the company possesses related technologies ranging from genome analysis to culturing human-derived hard-to-culture microorganisms, product commercialization, and development of pharmabiotics based on material delivery systems. The microbiome refers to the entire genetic information of all microbial communities present in the human body. Sales are divided among its own products such as Jigeunok Bifidus Premium, raw materials, and original design manufacturing (ODM).

The company entered the KOSDAQ market in December 2018. At the time of listing, the public offering price range was 22,100 to 28,700 KRW, but the final offering price was set at 18,000 KRW. This was influenced by the trade war, global financial crisis, and economic slowdown. When determining the offering price, the estimated net profit for 2022 was discounted back to 2018.

The market where Bifido operates is one of the rapidly growing markets in Korea. As interest in health has increased, sales of health functional foods have also risen. According to the Korea Health Supplements Association, the domestic probiotics market size grew from 465.7 billion KRW in 2017 to 644.4 billion KRW last year.

The lead underwriter, Korea Investment & Securities, and Bifido expected an annual sales growth rate in the 10% range. This expectation was based on steady growth in existing businesses and the commencement of sales from new microbiome-related businesses, including finished products and care analysis services in three areas: digestive system, oral cavity, and skin. They projected sales and profits to increase accordingly. The plan was to record sales and operating profit of 16.1 billion KRW and 4.2 billion KRW in 2018, followed by 21 billion KRW and 5.5 billion KRW in 2019, and 33.7 billion KRW and 8.6 billion KRW in 2020.

However, Bifido did not meet expectations in the rapidly growing probiotics market. On a separate basis, it recorded sales of 14.9 billion KRW and operating profit of 3.5 billion KRW in 2018. The gap rates between sales and operating profit were 7.62% and 16.62%, respectively. Nevertheless, compared to the previous year, sales and operating profit grew by 8.8% and 16.0%, respectively.

Last year, performance declined. On a consolidated basis, sales were 13 billion KRW and operating profit was 1.4 billion KRW. Compared to the previous year, sales decreased by 12.49% and operating profit by 60.23%. The gap rates between estimated and actual sales and operating profit reached 37.89% and 74.44%, respectively. Sales of all products declined, with a significant impact from decreased sales in the raw material sector. A company representative explained, "This was due to a reduction in orders from overseas."

In the first quarter of this year, sales rebounded successfully. Sales reached 3.5 billion KRW, a 23.30% increase compared to the same period last year. However, operating profit during the same period remained at 300 million KRW, a 5.7% decrease.

Although there was some rebound, it is difficult to be optimistic about the future. In the domestic lactic acid bacteria market, consumer awareness is rising, and competition among companies is expected to intensify further for the time being. However, Bifido plans to continuously strengthen research and development (R&D) in new businesses and also aims to enter overseas markets. The company is currently preparing analysis services and plans to launch business in China first.

A company representative said, "We planned to aggressively advance our business this year, but due to the impact of COVID-19 and other factors, it has not been easy. However, we plan to strengthen marketing in the second half of the year. We are also preparing microbiome-related analysis services and intend to approach China first in the second half of the year."

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