Hana Securities said on the 5th that expectations for narrowing overseas losses at Pulmuone could be reflected in the share price in the short term. It did not provide a target price or an investment opinion. Pulmuone's previous trading day closing price was 13,110 won.
Under consolidation, Pulmuone posted sales of 888.4 billion won and operating profit of 38.1 billion won in the third quarter of this year. Those figures rose 6.6% and 14.1%, respectively, from a year earlier. Large contract wins from domestic food service clients, a narrower loss at overseas subsidiaries, and strong sales of new processed food products contributed to the solid results.
The U.S. subsidiary saw its quarterly loss widen significantly in the first half due to tariffs and sluggish sales of refrigerated noodles. Overseas subsidiaries posted an operating loss of 2 billion won in the third quarter, but the U.S. subsidiary is estimated to have been around the break-even point (BEP) in the third quarter as tofu private brand (PB) products began new supply.
At the Japan subsidiary's tofu bar business, growth has slowed, and the company is pushing to consolidate production bases, so fixed cost savings are expected to appear gradually from the fourth quarter.
Hana Securities projected that under consolidation next year, Pulmuone will post sales of 3.526 trillion won, up 4.4% from a year earlier, and operating profit of 113.1 billion won, up 21.6% in the same period.
The key to Pulmuone's short-term profit and loss improvement lies in its overseas subsidiaries. Shim Eun-ju, a researcher at Hana Securities, said, "The U.S. subsidiary can reduce losses by newly supplying tofu PB products and winning orders for noodle products in the business-to-business (B2B) channel," adding, "The Japan subsidiary can also cut losses by around 3 billion won thanks to production base consolidation."
She added, "This year's sales in China are expected to increase 25.7% from last year, driven by strong sales of new products such as frozen kimbap and shelf-stable pasta," and "We expect double-digit growth next year as well."