[Click eStock] "Ottogi Falls Short of Market Expectations... Target Price Lowered"

On August 18, iM Securities lowered its target price for Ottogi from 600,000 won to 550,000 won.

In the second quarter of this year, Ottogi recorded sales of 902 billion won, a 5% increase compared to the same period last year. However, its operating profit fell by 26.8% during the same period to 45.1 billion won. Weak domestic food consumption and increased costs such as labor expenses continued to put pressure on margins, negatively impacting profitability.

Lee Kyungshin, a researcher at iM Securities, stated, "Margin contraction on a separate basis persisted due to cost inputs deducted from sales and the burden of labor expenses," adding, "Although the price increases for major products implemented since April and the domestic demand stimulus trend are expected to enable a recovery in profits after the second half of 2025, it is regrettable that there will be short-term adjustments and delays in recovery."

Lee also commented, "Overseas operations, including those in Vietnam and the United States, are experiencing growth," and added, "Considering the recent expansion of overseas subsidiaries and investments in logistics, there are expectations for a meaningful increase in the overseas portion of the business from a mid- to long-term perspective, despite short-term cost inputs."

However, the target price was revised downward to 550,000 won.

Lee explained, "The economic slowdown is leading to margin pressures, and we are lowering the target price in line with revised operating performance estimates that take into account the possibility of some short-term continuation."

He further stated, "Given that the growth rates for major distribution channels remain robust, we do not believe the margin decline will be a long-term issue."

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