[Click eStock] "Pulmuone, Weak Q2 but Holds Mid- to Long-Term Growth Drivers"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities evaluated Pulmuone on the 18th, stating that although its second-quarter earnings this year fell short of market expectations, it possesses both mid- to long-term performance potential and valuation re-rating factors. They maintained a 'Buy' investment rating and a target price of 25,000 KRW.

Pulmuone recorded consolidated sales of 635.1 billion KRW in the second quarter, a 12.4% increase compared to the same period last year, while operating profit decreased by 37.3% to 9.2 billion KRW. This underperformed market consensus due to the U.S. subsidiary turning to a loss.

The domestic subsidiary saw a decline in high-margin fresh food sales compared to the previous year, but overall profitability was maintained through cost efficiency, increased meal service orders, and reductions in operating losses in the food service and dining sectors due to labor and rental fee refunds. The U.S. subsidiary experienced growth in core items across major channels, but overall sales contracted due to changes in the supply structure of ethnic channels. Additionally, operating losses were recorded due to labor supply issues caused by government unemployment benefits, increased ocean freight costs, and container shortages. The Japanese subsidiary continued its loss trend as it is still demarketing low-profit clients and transitioning products. The Chinese subsidiary sustained sales growth with the full-scale sales of processed tofu expanded last year, maintaining a double-digit operating profit margin.

Researcher Jomi Jin of NH Investment & Securities analyzed, "The U.S. subsidiary is facing production capacity shortages, leading to some products being manufactured domestically and exported, which caused issues such as increased ocean freight costs and container shortages." She added, "As a result, not only could it not meet the increased local demand, but the cost increase also deteriorated overall profitability." However, she emphasized, "This is a temporary issue caused by logistics congestion and does not damage Pulmuone's product strength or brand power."

Pulmuone is evaluated to possess all the core growth drivers of the food and beverage industry. Researcher Jomi Jin stated, "It holds unique domestic brand power, growth in overseas markets, and entry into the plant-based protein market, encompassing all mid- to long-term performance and valuation re-rating factors." She added, "The Chinese subsidiary continues to benefit from product and channel diversification effects, maintaining double-digit sales growth and operating profit margins after capacity expansion, and the U.S. subsidiary is expected to regain growth momentum once supply stabilizes."

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