Shinsegae Food Anticipates Expansion of No Brand Burger Franchise Business

[Asia Economy Reporter Hyungsoo Park] Hana Financial Investment forecasted on the 11th that Shinsegae Food's performance will improve starting from the second half of this year. They expect the profit growth rate to accelerate from next year and raised the target stock price from 63,000 KRW to 100,000 KRW.

Sim Eunju, a researcher at Hana Financial Investment, explained, "Shinsegae Food has returned to a single CEO system after two years," adding, "CEO Song Hyunseok has marketing experience from McDonald's, Pizza Hut, and OB Beer."

She continued, "We believe that Shinsegae Food will put considerable effort into expanding the 'No Brand Burger' franchise business," and added, "They have ordered an expansion of the manufacturing business through organizational restructuring."

Furthermore, she emphasized, "The catering, food distribution, and procurement logistics sectors are expected to continue cost reduction and restructuring," and "Based on the expansion of the home meal replacement (HMR) and meal kit manufacturing lines, synergies will be created between the dining-out and bakery businesses."

She analyzed, "They plan to open 100 franchise stores by the end of this year," and "As of the first quarter, the number of franchise stores is estimated to be about 30.

Researcher Sim said, "Considering that competitors have around 1,000 franchise stores, the medium- to long-term expansion potential is significant," and "Shinsegae Food's performance is expected to improve meaningfully with the expansion of franchise stores."

As the number of franchise stores increases, the scale of royalties grows, and the operating rate of manufacturing plants supplying patties, hamburger buns, lettuce, etc., also rises. It is estimated that an increase of 100 franchise stores will boost operating profit by 8 to 10 billion KRW.

Researcher Sim predicted, "The improvement in manufacturing margin will be greater as the number of franchise stores increases," and "Performance improvement will begin in earnest from the end of this year when the opening of 100 franchise stores is completed."

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