[Click eStock] "Daesang Lowers Operating Profit Estimates Due to Cost Burden... Target Price Down"

[Asia Economy Reporter Lee Jung-yoon] On the 23rd, KB Securities announced that the operating profit estimate for Daesang was downgraded due to rising grain prices and transportation costs, lowering the target stock price from the previous 31,000 KRW to 29,000 KRW. However, they maintained a buy rating, expecting that kimchi factories in the US and China will drive overseas growth.

Daesang's consolidated sales for the fourth quarter increased by 7.5% year-on-year to 794.8 billion KRW, and operating profit rose by 180.2% to 17.5 billion KRW, expected to meet the market forecast of 18.2 billion KRW.

However, the outlook is not bright due to cost burdens. Operating profit margins have been declining each quarter due to rising grain prices, recording 6.7% in Q1 last year, 5.5% in Q2, and 3.9% in Q3. The fourth quarter of last year was predicted to be 2.2%. Operating profit estimates for this year and 2023 were downgraded by 7.6% and 1.4%, respectively.

Lee Seon-hwa, a researcher at KB Securities, explained, "PT Miwon's profitability has been damaged due to increased corn costs for starch syrup, and competition intensified in the MSG sector as Chinese products entered the market. However, since major competitors are adjusting prices, PT Miwon is also likely to raise prices, and Miwon Vietnam is operating a new food factory, increasing sales of seaweed and tteokbokki, improving profitability as well."

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