Record-Breaking Strong Performance in Food Stocks... Stock Prices Remain Stagnant

[Asia Economy Reporter Park Jihwan] The food industry is expected to report record-breaking performance results last year, but stock prices have not shaken off their sluggish trend. Analysts say that the ongoing rise in raw material prices and the base effect from the significantly increased performance due to COVID-19 last year are acting as obstacles.

According to the Korea Exchange on the 6th, the stock prices of major food companies such as CJ CheilJedang, Daesang, Nongshim, Samyang Foods, Ottogi, and Orion have fallen by an average of 0.54% since the beginning of this year. Daesang's closing price on the 4th was 26,050 KRW, marking only a 0.96% increase since the new year. Most food companies saw stock price declines: Nongshim (-4.00%), Samyang Foods (-9.21%), Ottogi (-1.91%), and Orion (-4.44%). Only CJ CheilJedang's stock price rose, increasing 15.35% from 381,000 KRW at the end of last year to 439,500 KRW on the 4th.

According to financial information firm FnGuide, CJ CheilJedang's operating profit last year is expected to reach 1.3965 trillion KRW, marking the first time operating profit has surpassed 1 trillion KRW. This represents a 55.7% increase compared to 896.9 billion KRW the previous year. The rapid growth of the home meal replacement (HMR) market due to COVID-19 and the expansion of global business, including overseas sales of Bibigo dumplings reaching 1 trillion KRW, had a significant impact.

Daesang's operating profit market forecast for last year is 193.2 billion KRW, approaching the 200 billion KRW mark. This is a 48.84% increase compared to 129.8 billion KRW the previous year. The ramen industry, including Nongshim and Samyang Foods, is also expected to exceed 100 billion KRW in operating profit. Samyang is projected to have an operating profit of 102.9 billion KRW, a 31.42% increase from 78.3 billion KRW in the same period last year. Nongshim, which hit big with Chapaguri last year, is also poised to enter the 100 billion KRW operating profit range for the first time in five years. Although it had remained below 100 billion KRW since 2015 (118.3 billion KRW), it is expected to have recorded 157.1 billion KRW last year. Ottogi and Orion are also expected to see operating profit increases of 9.0% and 10.5%, respectively, compared to the previous year.

Despite the strong performance streak of major food companies, stock prices are showing a different trend. Above all, the rise in raw material prices is cited as a burden. As of the fourth quarter of last year, wheat prices rose 15%, corn 9%, and soybeans 24% compared to the same period the previous year. Jomijin, a researcher at NH Investment & Securities, said, "The cost of goods sold ratio for food and beverage companies is over 50%, making profit fluctuations inevitable due to rising grain prices."

There is also a forecast that the significantly increased performance due to COVID-19 last year will act as a high base effect this year. Kim Jeongseop, a researcher at Shin Young Securities, evaluated, "Despite the KOSPI's strong performance, the food and beverage sector's stock prices have shown a quiet trend due to the base burden from rapid growth since August last year."

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