[Click eStock] "Maeil Dairy, Performance Improvement Expected with Product Expansion and Powder Factory Operation"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 100,000 KRW on Maeil Dairies, estimating that the company will continue its performance improvement trend this year.

Consolidated sales and operating profit for the fourth quarter are estimated at 395 billion KRW and 24.7 billion KRW, respectively, representing increases of 6.8% and 2.8% compared to the same period last year. Despite being an off-season, the quarterly profit is expected to be around 25 billion KRW, which is positive.

Sales growth is attributed to the price increase effects of some products such as white milk and cup coffee, as well as steady growth in Sangha Farm and plant-based milk. The plant-based milk market has recently grown rapidly, positively impacting Maeil Dairies' performance contribution. Selex is also expanding its market share. Although Selex's share was only 3% in 2020, it is analyzed to rise to 6.5% this year.

Sim Eun-joo, a researcher at Hana Financial Investment, said, "The decline in domestic infant formula sales is a burden," adding, "Exports to China also showed a downward trend, and last year's infant formula sales are expected to have decreased by single digits compared to the same period the previous year."

This year, consolidated sales and operating profit are estimated at 1.639 trillion KRW and 97.6 billion KRW, respectively, representing increases of 6% and 8.7% compared to one year ago. The steady performance improvement is expected to be influenced by the price increase effect and the high sales growth of 'plant-based milk' and 'Selex.'

The domestic alternative milk market is understood to have exceeded 600 billion KRW last year, and Maeil Dairies is expected to expand its category following the launch of the new product 'Amazing Oat.' Selex's sales are projected to surpass 100 billion KRW this year.

Due to economies of scale, profit contribution is also expected to increase. Researcher Sim said, "The milk powder factory of the Australian CBDG Group, acquired at the end of 2020, has completed construction and started operations in the second half of the year," explaining, "Australian milk powder is understood to be more than 50% cheaper than domestic products, so stable raw material procurement is expected to reduce costs."

Currently, Maeil Dairies' 12-month forward price-to-earnings ratio (PER) is 7 times, suggesting that valuation pressure is not significant.

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