[Featured Stock] Serim B&G Leads US Biodegradable Market... US Begins Restricting Single-Use Plastics

[Asia Economy Reporter Park Hyungsoo] Serim B&G is showing strong performance. It appears that news of the Joe Biden administration initiating procedures to reduce single-use plastic usage in the U.S. federal government has influenced the stock price.

As of 9:32 AM on the 8th, Serim B&G is trading at 3,430 KRW, up 10.29% from the previous day.

The U.S. General Services Administration (GSA) announced on the 7th (local time) that it is collecting information related to single-use plastic usage at the federal government level. The GSA stated this is part of measures to restrict single-use plastic usage in the federal government. Previously, the U.S. Department of the Interior announced plans to gradually ban the sale and distribution of single-use plastic products in U.S. national parks and public lands by 2032.

The Department of the Interior also plans to prepare alternatives to plastic product bans, such as using biodegradable materials or 100% recycled materials.

Serim B&G is a company specializing in eco-friendly packaging. Its business divisions are vacuum forming, eco-friendly products, and merchandise. As of last year, the sales proportions were 67.7%, 23.1%, and 9.2%, respectively. The vacuum forming division manufactures and sells packaging containers used for food. The eco-friendly division produces films and packaging materials based on biodegradable plastics. Biodegradable plastics refer to plastics that are 100% naturally decomposed by microorganisms when buried in soil. They are environmentally friendly and harmless to the human body.

Kim Yongho, a researcher at Hanwha Investment & Securities, explained, "The high growth trend in the eco-friendly division, which is gaining momentum, will drive the overall company’s future performance. As plastic regulations strengthen and the application scope of biodegradable plastics expands, Serim B&G will benefit from a first-mover advantage by proactively entering the biodegradable plastics market."

He added, "They have secured over 150 client companies. Since it is still in the early introduction stage, the sales scale per client is not large, but the growth rate is expanding."

Furthermore, he noted, "Among the clients, iMarket Korea, which has the largest sales volume, recorded 4.9 billion KRW last year."

Researcher Kim also analyzed, "They are expanding sales mainly in the U.S., where they have delivery references, to advance overseas. Export momentum can also be expected."

Serim B&G possesses advanced technologies such as raw material compounding, molding, and processing.