IBK Securities on the 27th said that Binggrae's short-term earnings are expected to be sluggish due to weak domestic demand and higher labor costs, but its investment appeal remains intact amid a stronger stance on shareholder returns. It maintained a "buy" recommendation and a target price of 95,000 won. The previous trading day's closing price for Binggrae was 73,200 won.
For the first quarter of this year, Binggrae's sales on a consolidation basis are estimated at 310.9 billion won, up 0.8% year over year, with operating profit at 7.8 billion won, down 42.2%. This falls short of the market consensus (sales 324.1 billion won, operating profit 14.2 billion won).
Researcher Kim Taehyeon at IBK Securities said, "With the contraction in domestic consumption continuing, the decline in chilled product sales will likely persist," adding, "However, exports to overseas markets such as the United States and China are expected to hold sales at last year's level."
Binggrae resolved early this year to absorb and merge with Haitai Ice Cream Co. and carried out a voluntary retirement program. As a result, one-off expenses such as severance pay are expected to be reflected, leading to a sharp decline in operating profit.
Kim said, "Through the second quarter, expectations for results are somewhat limited due to the impact of merger-related expenses, but in the second half, profitability improvement and business synergies will gain momentum." In particular, Haitai Ice Cream Co. is expected to find it easier to expand overseas sales channels through Binggrae's overseas distribution network.
He added, "Despite a 46% drop in net profit last year, the company maintained a cash dividend of 3,000 won per share (a dividend yield of 4.0%), and it recently canceled 286,000 treasury shares, strengthening its shareholder return policy, which is also positive."