[Click eStock] "Maeil Dairies, Positive on Raw Milk Price Freeze... Expecting Demand Recovery in Second Half"

[Asia Economy Reporter Eunmo Koo] Hana Financial Investment analyzed that the freeze on raw milk prices is positive for Maeil Dairies and expects demand recovery in the second half of the year.

According to Hana Financial Investment on the 5th, the Korea Dairy Industry Association and the Dairy Cooperative agreed to freeze the raw milk price at 926 KRW per liter this year. The raw milk price will increase by 21 KRW to 947 KRW per liter starting from August next year. Eunju Shim, a researcher at Hana Financial Investment, evaluated in a report on the day, "The freeze on raw milk prices until July next year alleviates concerns about short-term cost burden, which is positive."

She also analyzed, "In the first half of the year, dairy product demand was sluggish due to delayed school openings caused by COVID-19, but in the second half, demand recovery for processed products and cup coffee due to school openings and hot weather can be expected." She also positively evaluated the steady increase in sales of Maeil Dairies' new products. In particular, the health functional food 'Selex' is expected to show solid sales growth through product category expansion.

However, she diagnosed that expectations for the second quarter of this year should be lowered. Hana Financial Investment estimates Namyang Dairy's consolidated sales for the second quarter to be 361.9 billion KRW, up 3.5% year-on-year, and operating profit to be 21.7 billion KRW, down 21.9%. It is understood that overall dairy product demand was sluggish due to delayed school openings.

Researcher Shim explained, "Domestic infant formula sales are expected to continue declining year-on-year," adding, "The decrease in domestic birth rates and the expansion of market share by foreign infant formula companies remain burdens, and exports of Chinese manufactured infant formula are also understood to have slightly decreased compared to the previous year." The second quarter export amount of Chinese infant formula is estimated to be around 5 billion KRW. Cup coffee and processed milk are also expected to have significantly declined profitability year-on-year due to market stagnation and promotional activities.

Researcher Shim said, "Fortunately, relatively high-margin products such as Sangha Farm and grain milk are understood to be maintaining solid growth, and sales of the adult health food 'Selex' continue to show favorable trends," and predicted, "They will aim to increase sales through category expansion in the second half of the year."

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