Foodnamu, Expects Benefits from Expanded Product Supply and Operation of China Line Next Year

[Asia Economy Reporter Minji Lee] Foodnamu is expected to show high sales growth next year due to product supply to the Republic of Korea Armed Forces and the operation of the China line.

According to Shinhan Financial Investment's estimates on the 19th, the consolidated sales for the fourth quarter are expected to reach 30.8 billion KRW, a 93.5% increase compared to the same period last year, and operating profit is expected to increase by 53.9% to 2.2 billion KRW during the same period. Sejong Hong, a researcher at Shinhan Financial Investment, said, “The sales growth rate continues to exceed expectations,” adding, “As the number of subscribers to RankingDakcom approaches 1.3 million, the scale of the main brands is expected to expand rapidly.”

Strategic advertising expenses are being executed in preparation for the resurgence of COVID-19, so profitability in the fourth quarter is expected to decline slightly. The cost of sales ratio is expected to remain around 64%, with little change compared to the third quarter.

Growth is expected to accelerate in the first quarter of next year. This is because the supply to the Republic of Korea Armed Forces, which has been awaited for two years, has been confirmed starting next year. Initially, room-temperature chicken breast sausages and fried rice will be sold. Conservatively estimating performance, annual sales of 2 billion KRW are expected, and considering the performance trends of competitors, annual sales of 4 to 6 billion KRW are also possible.

The China line currently has employees dispatched for technical inspections for mass production. Sales are expected to begin in earnest as early as January or February next year, or by March at the latest. Since Wingip Food's distribution network will be utilized, cost expenditures are expected to be limited. The number of product SKUs is expected to start with the sale of chicken breast softballs and expand to items such as chicken breast steak and Han-kki mandu (one-meal dumplings).

Next year's consolidated sales are expected to reach 168.1 billion KRW, and operating profit 14.5 billion KRW, representing growth of 41% and 80% respectively compared to the same period last year. The China performance is not factored in, so even conservatively estimating next year's sales, it is expected to approach 200 billion KRW. Researcher Sejong Hong explained, “Looking at the valuation, it is a significantly undervalued range, and it is necessary to consider the rapidly growing scale and net cash exceeding 40 billion KRW,” adding, “It is a domestic home meal replacement (HMR) operator with a digital platform, and the operating profit margin approaches 9%.”