[Click eStock] "S&D Benefits from K-Food Boom... Undervalued Compared to Peers"

On the 13th, KB Securities analyzed that S&D is expected to experience joint growth with major clients due to the K-Food boom.

Established in 1998, S&D is a company that produces materials for general functional foods and health functional foods. In September 2021, it was uplisted from KOSDAQ's KONEX market to the KOSDAQ market. It has about 158 clients including Samyang Foods, Nongshim, Pulmuone, and CJ CheilJedang, and produces over 230 types of food materials.

In particular, Samyang Foods' Buldak series has seen continuous sales growth centered on China, Southeast Asia, and the United States, which directly leads to the joint growth of S&D, the exclusive supplier of the core raw materials for the Buldak series' liquid and powder sauces.

Researcher Lim Sang-guk of KB Securities stated in the report on the same day, "Despite the off-season, the first quarter results showed sales of 23.8 billion KRW and operating profit of 3.5 billion KRW, growing 30.8% and 72.2% respectively compared to the same period last year, continuing the strong performance trend." He analyzed, "The global K-Food, especially the Buldak series boom, has led to an estimated 42.7% increase in sales of general functional food materials (core raw materials for sauces) to major clients compared to last year, and the operating profit margin also rose significantly from 11.2% in the first quarter of last year to 14.8%."

Researcher Lim added, "With the global spread of K-Content, the expansion of the K-Food boom is leading to increased overseas exports by major clients," and "this is a factor in S&D's performance growth, and further capacity expansion is expected in the future."

He also stated, "In the case of general functional food materials, business diversification such as shifting from B2B-centered to finished product-centered B2C and promoting own branding is the next growth momentum," and forecasted, "Based on the existing food materials business, launching high value-added finished products such as convenience foods and seasonings can flexibly respond to market trend changes and act as another growth momentum."

Furthermore, he analyzed, "As of the end of the first quarter this year, the retention ratio is 4305%, ROE is 12.7%, cash equivalents are about 62 billion KRW, and the financial structure is very sound with no debt management," and "the current stock price is trading at a P/E ratio of 8.1 times based on this year's expected performance, which is significantly discounted compared to the average P/E of 16.1 times of peer companies and major clients."

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