Hanwha Investment & Securities recently evaluated that Shinsegae Food will continue to grow as a mass production company following its recent restructuring and financial improvement on the 8th. No investment opinion or target stock price was provided. The closing price of Shinsegae Food on the previous trading day was 42,200 won.
Han Yoo-jung, a researcher at Hanwha Investment & Securities, said, "We will seek growth by expanding the bakery business utilizing mass production capabilities and the franchise business of No Brand Burger (NBB)," adding, "In particular, the expansion of business-to-business (B2B) sales of semi-finished products is expected to be a growth driver."
The domestic bakery market continues to grow structurally due to changes in consumer habits, but despite the increase in demand, the market is still mainly franchise-centered. A researcher believes that only a few companies with large production plants will benefit in a situation where many small and medium-sized bakery companies rely on small-scale factories or store-based production.
Hanwha Investment & Securities viewed that Shinsegae Food has achieved a change in its structure through rigorous restructuring recently. The liquidation of 'Better Foods' in the first quarter and 'Smoothie King Korea' in the second quarter are representative examples. The restaurant business has also completed restructuring.
One researcher noted, "The only restaurant brand expected to expand in the future is NBB" and forecasted that "due to the introduction of the NBB 2.0 franchise model in May, rapid store expansion has become possible sooner than expected, and the contributions of the restaurant division to profits will gradually increase."
The improvement in financial structure by selling the institutional sector for 120 billion won last month is also positive. The sale profit of about 10.19 billion won will be reflected in the fourth quarter results of this year. A large cash inflow is expected to significantly improve the liability ratio.
One researcher commented, "Considering that the institutional food service business was facing rising labor costs, intensified competition, and a market restructuring trend centered on large companies, it is actually commendable to have decisively reorganized it," adding, "I believe it was the best choice in terms of resource reallocation and financial soundness."