[Click eStock] "Pulmuone, Expecting Significant Earnings Improvement in Q1"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained its 'Buy' rating and target price of 25,000 KRW for Pulmuone on the 2nd, expecting a significant improvement in the company's performance in the first quarter of this year.

Daishin Securities estimated Pulmuone's first-quarter results on a consolidated basis at 544.6 billion KRW in sales and 13.6 billion KRW in operating profit. While sales decreased by 3% compared to the same period last year, operating profit increased by 200%. Researcher Han Yujeong of Daishin Securities said, "Operating profit exceeded the consensus estimate of 12.6 billion KRW, and a significant improvement in performance compared to the same period last year is expected."

Domestic food sales are expected to increase by 3% year-on-year, supported by strong sales of key products. This represents a 21% increase compared to the first quarter of 2019. The deficits in group catering, food service, and dining sectors, which were inevitably sluggish due to the impact of COVID-19, are also expected to lead profit improvements as the losses narrowed by 800 million KRW and 4.7 billion KRW respectively compared to the same period last year.

The situation of overseas subsidiaries is not bad either. Researcher Han said, "The deficit of the Japanese subsidiary has improved, and the U.S. subsidiary is expected to continue its profitability improvement trend. However, due to increased promotional expenses related to the newly launched plant-based food brand 'Plantsspired' in this first quarter, the improvement will be more prominent from the second quarter." He added, "The Chinese subsidiary is maintaining improved profitability while continuing external growth."

A favorable performance trend is expected to continue this year. Researcher Han said, "Despite a 50% increase in operating profit last year, the improvement trend in the domestic food sector is expected to continue this year," adding, "Group catering, food service, and dining sectors are expected to see a 60% increase in operating profit this year due to the base effect." Along with this, it is forecasted that the turnaround in overseas business sectors will be meaningful as Pulmuone solidifies its position in the domestic and international plant-based protein markets, and the high market growth potential is also seen as positive.