[Click eStock] "Binggrae, Cost Increase Burden"... Target Price ↓

[Asia Economy Reporter Lee Jung-yoon] IBK Investment & Securities stated on the 17th that it is unlikely for Binggrae to improve its operating margin due to the burden of rising input costs, and thus lowered its target stock price from 63,000 KRW to 63,000 KRW. However, it maintained a buy rating citing solid external growth.

Binggrae's consolidated sales and operating loss for the fourth quarter of last year were 234.4 billion KRW and 11.7 billion KRW, respectively, in line with IBK Investment & Securities' estimates of 228.8 billion KRW in sales and 12.1 billion KRW in operating loss. Kim Tae-hyun, a researcher at IBK Investment & Securities, explained, "Although the effect of acquiring Haitai Ice Cream in October 2020 has disappeared, solid external growth continued due to price increases of key products such as Banana Flavored Milk and strong sales of protein drinks, ambient temperature products, and others." He added, "Despite the burden of rising raw material prices such as sugar, coffee, and raw milk, the deficit was reduced due to decreased selling and administrative expenses including wages."

However, on an annual basis, sales increased by 19.6% compared to the previous year after acquiring Haitai Ice Cream, but operating profit decreased by 34.1% due to Haitai Ice Cream's operating loss and overall cost and expense increases. Additionally, profitability worsened as net income recorded a deficit of 19.3 billion KRW due to the prior reflection of a 38.8 billion KRW fine imposed by the Fair Trade Commission for price-fixing in the ice cream market.

Researcher Kim analyzed that Binggrae's cost burden will gradually ease from the second half of this year. He said, "Consolidated sales and operating profit this year are expected to increase by 6.4% and 22.1%, respectively, compared to the previous year," adding, "Following the price increase of refrigerated products in November last year, Binggrae raised prices of frozen desserts in March this year, so the cost burden is expected to gradually ease as the year progresses."

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