[Asia Economy Reporter Kwon Jae-hee] The food and beverage stocks, which were expected to soar in the second half of the year as beneficiaries of the 'reopening,' have encountered an unexpected obstacle. This is due to supply disruptions caused by the Cargo Solidarity Union strike. Starting with HiteJinro, which was directly hit by the strike, attention is focusing on whether the logistics difficulties will spread throughout the food and beverage industry.
According to the Korea Exchange on the 8th, as of 9:06 a.m., HiteJinro was trading at 34,700 KRW, unchanged from the previous trading day. On the first day of the general strike by the Cargo Solidarity Union under the Korean Confederation of Trade Unions on the 7th, HiteJinro closed down 2.53% at 34,700 KRW. During the trading session, HiteJinro's price even dropped to 34,300 KRW at one point. HiteJinro was considered the top favorite stock among reopening beneficiaries. At the same time, Lotte Chilsung was trading at 194,500 KRW, down 1.02% from the previous trading day.
Food and beverage stocks were initially regarded as reopening beneficiaries, raising expectations for stock price increases. Among them, HiteJinro was expected to see further price rises in the second half of the year due to both increased sales volume (Q) from reopening and price hikes (P) driven by rising raw material grain prices. After the lifting of social distancing, HiteJinro's beer 'Terra' saw shipment volumes surge 95% compared to the previous month, riding the rapid wave of reopening, but the strike has put a brake on this momentum. Due to the general strike by the Cargo Solidarity Union on the previous day, HiteJinro's shipment volume reportedly plummeted to one-tenth of the usual level. Competitor Lotte Chilsung has not yet experienced production or transportation disruptions but is on high alert for potential expansion of strike effects. CJ CheilJedang, Nongshim, Orion, and Ottogi have not yet been directly affected by the Cargo Solidarity Union strike but are closely monitoring the situation.
Han Yoo-jung, a researcher at Daishin Securities, analyzed, "About 30% of the truck owners belonging to Suyang Logistics, the freight transport contractor for HiteJinro, joined the Cargo Solidarity Union under the Korean Confederation of Trade Unions last March and are currently on strike." She added, "Although products are being transported temporarily using external trucks, prolonged strike action will inevitably cause logistics disruptions."
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