[Click eStock] It's All Thanks to 'Poketmonppang'... "SPC Samlip's Performance Is Good This Year"

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Kiwoom Securities on the 16th issued a buy rating and a target price of 115,000 KRW for SPC Samlip. This is based on the expectation that the company will show a differentiated performance improvement trend compared to competitors, supported by strong sales of Pokemon bread and increased sales volume in the wheat flour market.

SPC Samlip's consolidated operating profit for the second quarter is expected to grow 44% year-on-year to 21 billion KRW. The bakery division is anticipated to record sales of around 30 billion KRW, a 21% increase from the same period last year, driven by strong sales of Pokemon bread. Wheat flour sales are expected to increase by 46% during the same period due to price hikes and increased sales volume, leading to a slight improvement in operating profit margin.

Researcher Sangjun Park of Kiwoom Securities said, "The full-scale expansion of supply volume to ramen manufacturers, resulting in overall sales growth of over 20%, is positive," adding, "With the lifting of social distancing measures, the performance of the brand, rest area, and distribution businesses is also expected to improve."

The company is expected to continue showing differentiated performance improvement in the second half of the year. This is because strong sales of Pokemon bread and benefits to other business divisions from the reopening will drive overall performance improvement. In particular, to stably generate sales from Pokemon bread, the company plans to launch 161 types of the second-generation Pokemon Ttibuseal stickers starting in July and focus on expanding premium products. Although wheat flour profitability is expected to be weak due to rising raw material costs, additional price increases are anticipated in the second half depending on competitors' price hikes.

In the mid to long term, attention should be paid to the structural growth potential of the wheat flour business. Researcher Sangjun Park analyzed, "The bakery and wheat flour businesses are vertically integrated, and the scale of direct grain purchases is smaller compared to major competitors' business structures, so the margin impact from rising international grain prices will be relatively limited," adding, "Leveraging this advantage, the company is actively expanding supply volumes to ramen manufacturers, resulting in a significant increase in sales volume."