[Click eStock] "Foodnamu, Subscriber Growth and Repurchase Rate Increase... Target Price Up"

[Asia Economy Reporter Eunmo Koo] Shinhan Financial Investment has raised the target price for Foodnamu from 27,000 KRW to 28,000 KRW, citing not only an increase in subscribers but also a rise in repurchase rates.

On the 3rd, Shinhan Financial Investment estimated that Foodnamu's consolidated sales for the second quarter of this year would reach 27.7 billion KRW, a 65.8% increase compared to the same period last year, and operating profit would increase by 9.0% to 1.3 billion KRW. Researcher Sejong Hong of Shinhan Financial Investment stated in the report, "We are seeing not only an increase in subscribers but also a rise in repurchase rates," adding, "The advertising expenses invested in the first quarter have been confirmed to result in increased sales from April, and if the trend from April to May continues in June, the sales growth rate is likely to exceed estimates."

Operating profit estimates were also revised upward. Researcher Hong explained, "The increase in gross profit is greater than the increase in fixed advertising expenses," and predicted, "Although the selling and administrative expense ratio will rise by 2.3 percentage points in the second quarter, operating profit is expected to increase by nearly 10% compared to the previous year."

Consolidated sales for this year are expected to reach 102.2 billion KRW, a 57.8% increase from the previous year. Researcher Hong explained, "From the second half of the year, when advertising expenses settle down, profitability will improve sharply, and operating profit for the second half is expected to nearly double compared to the previous year. The momentum in China is also strong, with two production lines installed and distribution permits already obtained, so it would not be surprising if they join at any time."

The valuation remains attractive relative to growth. Researcher Hong said, "The 12-month forward price-to-earnings ratio (PER) from the second half of this year is around 17 to 18 times," adding, "This is an appropriate multiple for a domestic digital platform and export company, rather than a food and beverage manufacturer."