[Click eStock] "Kyochon F&B Achieves Record Quarterly Performance... Undervalued Appeal Highlighted"

[Asia Economy Reporter Park Jihwan] Eugene Investment & Securities evaluated that Kyochon F&B, despite achieving its highest quarterly performance through successful profitability improvement, remains undervalued compared to its competitors. The firm issued a 'Buy' rating and set a target price of 26,000 KRW.

Researcher Park Jongseon of Eugene Investment & Securities stated, "The consolidated Q3 results showed sales of 130.7 billion KRW and operating profit of 15 billion KRW, representing increases of 16.3% and 15.0% respectively compared to the same period last year, achieving the highest quarterly sales and operating profit."

This operating profit slightly exceeded the market consensus of 125.9 billion KRW in sales and 13.7 billion KRW in operating profit. The positive aspect of the Q3 results is that steady sales growth continued, leading to the highest quarterly operating profit. Sales from the domestic franchise business, which accounts for a large portion of revenue, increased by 14.7% compared to the same period last year. Overseas and new businesses grew by 41.4% and 117.8% respectively year-on-year, achieving their highest quarterly sales. Along with the increase in sales, profitability improved, resulting in record operating profit.

The outlook for Q4 performance is also positive. Researcher Park said, "The expected Q4 results are sales of 136.3 billion KRW and operating profit of 15.4 billion KRW, representing increases of 13.8% and 21.4% respectively compared to the same period last year," adding, "It is expected to set new records for quarterly sales and operating profit."

Two key factors to watch in Q4 are the development of differentiated craft beer and the synergy effect with the existing franchise business. Researcher Park emphasized, "The full-scale craft beer business is planned to be launched, and entry into convenience store channels began in October, which is positive." Currently, through Galadari Brothers Group, which operates 52 stores in 15 countries overseas and about 1,000 stores in the Middle East region, the company started opening in the Dubai area in October. The third store is scheduled to open within the year, with a mid- to long-term goal of opening 100 stores.

Researcher Park stated, "The current stock price is trading at a price-to-earnings ratio (PER) of 12.3 times based on 2021 expected earnings, which is significantly discounted compared to the average PER of 28.1 times for domestic similar and peer companies such as Dongwon F&B, Pulmuone, and Foodnamu."

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