[Click eStock] "Daesang, Price Increase Delayed... Target Price Down"

[Asia Economy Reporter Song Hwajeong] On the 30th, KB Securities lowered the target price for Daesang from 36,000 KRW to 31,000 KRW, anticipating that price increases will be difficult for the time being. The investment rating was maintained as 'Buy.'

Lee Seonhwa, a researcher at KB Securities, explained, "Due to the recent government request for cooperation on processed food price increases, the timing of price hikes has been delayed compared to the initial forecast. Additionally, the market risk premium for 2021 was raised from 5.93% to 7.37%, causing the cost of equity (COE) to rise from 6.65% to 7.66%, which led to the lowering of the target price."

At the Price-Related Vice Ministerial Meeting on the 26th, Kim Yongbeom, the 1st Vice Minister of the Ministry of Strategy and Finance, stated that with the rise in international grain prices, prices of processed foods such as instant rice, bakery products, and tofu have increased, resulting in higher perceived inflation. He added that the government will actively consider measures to alleviate the industry's burden by supplying government stockpiles to related companies and expanding financial and tax support. The researcher forecasted, "Processed food companies receiving government support will find it difficult to raise prices for the time being."

There is a positive analysis regarding price increases in the bio sector. In the B2B business of the materials division, a positive trend is emerging as bio spot prices continue to rise, leading to increased selling prices. The researcher stated, "It is understood that the prices of Daesang's major bio products such as lysine, histidine, and tryptophan have increased by 5-15% compared to the previous quarter," adding, "Price increases are relatively easier in the B2B business compared to the B2C business."