[Click e-Stock] "Shinsegae Food Enters Phase of Structural Profitability Improvement"

On August 20, IBK Investment & Securities analyzed that Shinsegae Food has entered a phase of structural profitability improvement. The firm maintained its "Buy" investment rating and target price of 58,000 won.

Shinsegae Food posted results for the second quarter of this year that exceeded IBK Investment & Securities' earnings estimates. Revenue was 371.5 billion won, down 5.7% year-on-year, while operating profit was 13.5 billion won, up 39.5% over the same period.

Nam Sung-hyun, a researcher at IBK Investment & Securities, explained, "Despite the sluggish economic environment, Shinsegae Food was able to achieve positive results due to efficient control of promotional expenses, a shift to high-margin channels, and the effects of increased supply prices."

Nam predicted that Shinsegae Food's earnings growth will continue in the second half of the year. He cited several reasons: the effects of restructuring around profitable channels; the possibility of continued benefits from increased supply prices in the manufacturing division; the elimination of unprofitable group catering channels; expanded market dominance within the group's distribution network; and the resumption of store openings following changes to the NBB Burger standard model.

Nam forecasted that Shinsegae Food's revenue for the second half of the year will decrease by 0.3% year-on-year to 756.4 billion won, while operating profit will grow by 185.5% year-on-year to 18.4 billion won.

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