[Click eStock] "SPC Samlip, Business Expansion Expectations... Target Price Up 11%"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating on SPC Samlip on the 26th and raised the target price by 11% from the previous level to 100,000 KRW.

SPC Samlip is expected to continue intensive restructuring of multiple brand stores including Eggslut, Bakery Factory, and Jibeun, which are anticipated to have synergies with other business divisions or high potential for additional business expansion. Yoojung Han, a researcher at Daishin Securities, said, “Operating profit in the brand business sector, excluding rest areas, improved to a level close to the break-even point when excluding store closure costs in the first quarter,” adding, “Although additional store closures are expected, making it inevitable to reflect related costs, the mid-term profit improvement through a selection and concentration strategy is expected to be greater than these one-time costs.”

It is also positive that the scope can expand from mainly room-temperature display cases to refrigerated and frozen display cases. The company has signed an exclusive distribution contract in Korea for Chobani, the number one yogurt brand in the U.S., and is preparing for a launch contract in major premium online and offline channels in the third quarter. It is also reported to have plans to expand its lineup of frozen bakery products, including frozen dough, and room-temperature prebaked products, as well as to nurture its brands.

Overseas business expansion is also planned. SPC Samlip plans to launch Samlip steamed buns in 50 stores of GS25 in Vietnam. Researcher Han explained, “It will take a considerable amount of time to achieve meaningful results, such as test sales within this year,” adding, “The significance should be placed on laying the foundation for overseas business expansion.”