[Click eStock] "Binggrae, 2Q Hetae Ice Cream Profit Contribution Expected"

[Asia Economy Reporter Song Hwajeong] IBK Investment & Securities maintained its 'Buy' rating and target price of 72,000 KRW on Binggrae on the 2nd, expecting solid earnings in the second quarter due to profit contributions from Haitai Ice Cream during the peak season.

In the first quarter of this year, operating profit sharply declined due to the acquisition of Haitai Ice Cream. On a consolidated basis for Q1, sales and operating profit were recorded at 233.9 billion KRW and 1.2 billion KRW, respectively. Sales increased by 20.4% year-on-year, but operating profit decreased by 80.8%. IBK Investment & Securities analyst Kim Taehyun explained, "Binggrae's standalone performance showed a solid increase in sales and operating profit by 9.7% and 27.9%, respectively, and overseas subsidiaries' ice cream sales, including in the U.S., also improved. However, the results of Haitai Ice Cream (sales of 26.9 billion KRW, operating loss of 3.1 billion KRW) were reflected, and about 2.1 billion KRW in amortization expenses of industrial property rights and customer relationship intangible assets due to the Haitai Ice Cream acquisition caused a sharp decline in consolidated operating profit."

In the second quarter, profit contributions from Haitai Ice Cream are expected due to the peak season. IBK Investment & Securities estimates Binggrae's consolidated Q2 sales to increase 21.8% year-on-year to 326.1 billion KRW, and operating profit to rise 9.4% to 29.3 billion KRW. Analyst Kim said, "Although about 2 billion KRW in intangible asset amortization expenses are expected to be reflected in Q2 as well, Haitai Ice Cream's operating profit is anticipated to turn positive during the peak season, and Binggrae's standalone performance is also expected to be solid. Despite unfavorable weather conditions in May with frequent rain, the sales growth trend will continue, supported by the expansion of ice cream consumption at home due to the increase in ice cream specialty stores."

For this year, consolidated sales and operating profit are estimated at 1.1277 trillion KRW and 43.6 billion KRW, respectively, representing increases of 17.6% and 9.3% compared to the previous year. Analyst Kim stated, "Considering the annual burden of about 8.5 billion KRW in amortization expenses for industrial property rights and customer relationship intangible assets, expectations for a significant profit improvement are limited. However, profit contributions from Haitai Ice Cream during the peak season and the base effect from the weak performance in Q3 last year due to the prolonged monsoon are expected to lead to a recovery in performance compared to the previous year."

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