[Click eStock] "Binggrae, Significant Increase in Operating Profit Expected This Year... Successful Marketing Targeting MZ Generation"

NH Investment & Securities announced on the 26th that Binggrae is expected to see a significant increase in operating profit this year, based on solid domestic performance and high export growth.

Baek Joon-gi, a researcher at NH Investment & Securities, explained, "Binggrae is a company that continues to grow in the domestic dairy market, based on steady sellers such as Banana Flavored Milk, Yoplait, and Melona. Since 2021, through marketing that incorporates characters into the brand, they have targeted the MZ generation (Millennials + Generation Z), showing fresh influence within the generally conservative food industry."

He added, "They are also renewing their brand image through marketing using social networking services (SNS), and at the same time, their performance has greatly improved. Binggrae’s operating profit margin fell to the 3% range in 2022, but it is expected to improve by more than 1 percentage point this year. Despite rising raw material prices, they are enhancing profitability through various cost-saving activities such as changing suppliers, which we view positively."

Binggrae is evaluated to have equipped itself with global growth momentum through exports to over 20 countries. Exports have higher profit margins compared to domestic sales, so profit improvement effects from growth are expected. The export ratio rose from 6% in 2017 to 14% in the first quarter of 2023. In the first quarter of this year, the sales growth rate of the Chinese subsidiary recorded 48%, the U.S. market is steadily growing through Costco, and in Southeast Asia, Binggrae is achieving high growth in frozen desserts.

This year, Binggrae’s sales are expected to increase by 14.2% year-on-year to 1.45 trillion KRW, and operating profit is forecasted to rise by 64.3% to 64.7 billion KRW. SNS-based content marketing has been effective, and meaningful growth in exports to the U.S., China, and Southeast Asia continues, according to analysis.

Researcher Baek said, "Considering the product portfolio and exports, we judge the valuation attractiveness to be high. Although there is downward pressure on food and beverage prices overall, in Binggrae’s case, the high proportion of raw milk in raw materials means that price reductions are not expected," he added.

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