School meal and food material supplier Hyundai Green Food will enter the apartment community food and beverage service market starting in the second half of this year through the Haeundae H Suite in Busan. Apartment community-based catering is considered an ambiguous business area for caterers. That is because it is not easy to secure a relatively stable number of diners. The mood in the related industry is that it is not easy to turn a profit.
However, on the 17th, the securities market is assessing Hyundai Green Food's entry into the apartment community business positively. Not only do earnings for the third quarter look set to improve right away, but the company is also seen as able to strengthen its capabilities as a comprehensive food company by offering food and beverage services within residential spaces in addition to its existing institutional catering, restaurant, and food material businesses. Last year, Hyundai Green Food's revenue was about 2.2 trillion won, and the revenue mix included 47% from the institutional sector (catering) and 26% from the food material sector.
Kim Jin-woo, an analyst at Eugene Investment & Securities, said, "Hyundai Green Food will enter the community food and beverage service market through the 558-household Haeundae H Suite. Taking into account new catering orders and the fact that hospital utilization has risen, operating profit in the third quarter looks set to improve," while setting a target price at 23,000 won.
In 2020, Hyundai Green Food also introduced Korea's first care food brand, "Greeting." Greeting offers health management meal plans such as protein-focused, low-sugar, and low-calorie options, as well as specialized diets (medical food) for people with indigestion and chronic diseases, and is expanding its business. It is evaluated as a strategy aligned with the social trends of an aging society and a rise in people with chronic diseases.
Until now, Hyundai Green Food has served as the cafeteria operator for the broader Hyundai-affiliated groups. The domestic institutional catering market is an oligopoly dominated by a few large companies. Samsung Group has Samsung Welstory; CJ Group has CJ Freshway; and Hanwha Group has OURHOME. According to 2020 data from the Fair Trade Commission, Hyundai Green Food won 440 billion won in orders from Hyundai Motor Group and Hyundai Heavy Industries Group. Considering that its food service institutional sector revenue at the time was 630 billion won, this means the broader Hyundai-affiliated share was around 69%.
Some observers link Hyundai Green Food's business diversification to a separation from the broader Hyundai Group. The view is that Hyundai Motor Group is focusing on overseas expansion, that domestic and overseas business sites are expected to increase, and that it could create its own in-house catering supplier.
Hyundai Green Food has been steadily growing since a spin-off from Hyundai G.F Holdings in Mar. 2023. In Jul. last year, Chung Ji-sun, chairman of Hyundai Department Store Group, donated his entire Hyundai Green Food stake to his wife and children, 2.92% each. Chung also donated 1.3% equity each to three children of his younger brother, Chung Kyo-sun, vice chairman of Hyundai Department Store Group—that is, his nephews and niece. At the time, Hyundai Green Food's share price was around 12,200 won. The closing price on the 16th rose to 15,370 won, up about 25%.
Hyundai Green Food also announced a plan to buy back and cancel about 3% of its own shares each year through 2028. In Aug., it acquired and canceled treasury shares and also paid an interim cash dividend. Since no parent gives a headache to their children as a gift, the securities market is paying attention to Hyundai Green Food's leap forward.
Recently, there have been many changes in the catering industry. OURHOME, formerly affiliated with the broader LG-affiliated groups, was merged and acquired by Hanwha Group, drawing attention to the direction of catering volumes tied to the LG-affiliated groups. After that, as OURHOME acquired Shinsegae Food's catering business, there is also a possibility it could absorb catering volumes related to Shinsegae. Amid these changes, the trajectory of Hyundai Green Food's new businesses is also in the spotlight. It is also worth watching the shareholder-friendly moves that the group has been steadily pursuing.