[Click eStock] "Binggrae, Early Heat Begins... 2Q Ice Cream Sales Expected to Improve"

[Asia Economy Reporter Lee Jung-yoon] IBK Investment & Securities maintained a buy rating and a target price of 63,000 KRW for Binggrae on the 8th, anticipating an improvement in ice cream sales in the second quarter of this year.

Binggrae's consolidated sales for the first quarter of this year increased by 9.3% year-on-year to 255.7 billion KRW, and operating profit rose by 30.8% to 1.6 billion KRW. Sales met IBK Investment & Securities' estimates, while operating profit exceeded them.

For the second quarter of this year, Binggrae's consolidated sales are estimated to increase by 11% year-on-year to 360.4 billion KRW, and operating profit is expected to rise by 12.2% to 20.5 billion KRW. Although cost pressures continue, a base effect reflecting the poor ice cream sales performance caused by unfavorable weather such as frequent rain in May and June last year is expected to lead to performance improvement.

By segment, refrigerated division sales are analyzed to increase by 6.8% year-on-year to 152.3 billion KRW due to strong sales of drinking fermented milk and coffee beverages. The frozen division is expected to expand by 16.8% to 146.9 billion KRW. The base effect from last year and the early heat starting in May this year have led to increased ice cream sales, and the price hike of major ice cream products implemented in March is expected to improve profitability. Additionally, ambient beverage sales are also predicted to show strong performance.

Kim Tae-hyun, a researcher at IBK Investment & Securities, explained, "According to the Korea Meteorological Administration's forecast, the average temperature this summer is likely to be higher than usual, so there is a high possibility of performance growth driven by strong ice cream sales continuing into the third quarter following this quarter. Although the Chinese subsidiary is expected to perform poorly due to lockdowns and other impacts, sales growth in the U.S. and Vietnam subsidiaries is expected to maintain overall sales improvement for overseas subsidiaries."