[Featured Stock] Hankook McNulty, Coffee Bean VAT Exemption... International Coffee Bean Prices Surge

[Asia Economy Reporter Park Hyungsoo] Hankook McNulty is showing strong performance. The recent news that the government will apply zero (0%) tariff quotas on imported goods such as pork, cooking oil, and coffee to stabilize soaring consumer prices appears to be influencing the stock price. Hankook McNulty operates the entire coffee-related business, from coffee beans to processed coffee products.

As of 9:18 AM on the 30th, Hankook McNulty is trading at 8,400 KRW, up 7.42% from the previous trading day.

The government announced emergency livelihood stabilization measures through the Economic Relations Ministers' Meeting. Since COVID-19, demand recovery combined with the Russia-Ukraine conflict and export restrictions by major grain-producing countries have caused global energy and food prices to rise sharply. Rising raw material costs are also driving up prices of processed foods such as flour, cooking oil, sauces, and coffee.

As a measure to reduce import costs, the government decided to apply tariff quotas on 14 key items focused on food and industrial raw materials.

Food raw materials such as soybean oil, sunflower seed oil, pork, wheat, and flour will have a 0% tariff quota applied. The 0% tariff quota currently applied to egg processed products will be extended, and the quota for feed root crops will be increased by 300,000 tons. Coffee and cocoa beans will be temporarily exempt from value-added tax until next year upon import. Individually packaged processed food products such as bottled and canned goods will be exempt from the 10% value-added tax until next year to induce price reductions.

When applying food tariff quotas, the government estimates that pork, for example, could see up to a 20% cost reduction effect. Exempting VAT on coffee beans will reduce costs by 9.1%.

International coffee bean prices are soaring due to reduced production caused by abnormal weather in Brazil, the world's largest producing region, and skyrocketing logistics costs. The Arabica coffee bean price, the international benchmark, closed at $2.28 per pound on the US ICE Futures Exchange on the 17th (local time), up 57.2% from $1.45 a year ago.