[Click eStock] "Foodnamu to Continue Performance Improvement This Year"

Shinhan Financial Investment Report

[Asia Economy Reporter Minji Lee] Shinhan Financial Investment maintained its buy rating and target price of 38,000 KRW for Foodnamu on the 5th, stating that the company's performance improvement trend is expected to continue this year.

This year's consolidated sales are estimated at 168.8 billion KRW, and operating profit at 12.5 billion KRW, representing increases of 44% and 87% respectively compared to the previous year. Profit estimates may vary significantly depending on the scale of advertising expenses. The year-end number of subscribers to RankingDakcom is expected to increase by 23% to 1.6 million.

Researcher Sejong Hong of Shinhan Financial Investment said, "This is thanks to the rising demand for white meat among domestic consumers and the effect of an increase in the number of products (KSU) on the platform," adding, "The gap with the second and third largest operators is also widening."

Advertising expenses aimed at maximizing sales growth are expected to continue. The estimated selling and administrative expense ratio, which was 29.9% last year, is expected to remain around 28.9% this year. The cost ratio is projected to remain stable regardless of broiler market prices due to the characteristics of chicken breast meat.

The key issue is the timing of line operation in China through Wingip Food. Considering the impact of COVID-19, the optimal timing is being considered, and the increase in demand for home meal replacements (HMR) in China and the utilization of Wingip Food's distribution network are raising expectations. Overseas performance has not been reflected in profit estimates, but JV results are expected to be recognized in consolidated statements during the first half of this year.

The company's potential scale of consolidated operating profit generation, assuming cost efficiency, exceeds 20 billion KRW. The cost of sales ratio is also stabilizing downward. However, the selling and administrative expense ratio, which was only 22.7% in 2018, approaching 30%, remains a burden.

Researcher Hong said, "Considering the high sales growth and increased subscribers, the corporate value has clearly risen significantly compared to the early stages of listing," adding, "If the overall profitability improves, the stock price could rise significantly at any time."

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