[Click eStock] SPC Samlip, Pokemon Bread Remains Strong... Target Price Up

[Asia Economy Reporter Lee Seon-ae] IBK Investment & Securities announced on the 28th that it maintains a buy rating on SPC Samlip and raises the target price by 5.3% from 95,000 KRW to 100,000 KRW. This is based on the expectation of balanced growth across all sectors, sustaining performance optimism in the second half of the year.

Kim Tae-hyun, a researcher at IBK Investment & Securities, explained, "Amid continued strong demand for Pokemon Bread, the launch effect of five new products (three types of bread and two types of frozen pizza) in early July adds to the expectation of performance growth in the second half. Therefore, we maintain a buy rating and revise upward the earnings per share (EPS) estimates for this year and next year."

Second-quarter consolidated sales and operating profit are estimated to have increased by 16.2% and 44.9% year-on-year to 830.7 billion KRW and 21.1 billion KRW, respectively. Balanced performance growth is expected across all business divisions, including bakery, and results are projected to exceed consensus estimates (sales: 802.7 billion KRW, operating profit: 18.2 billion KRW).

Balanced growth is expected across all sectors, with particularly notable performance in the bakery division. Bakery division sales are expected to increase by 27.3% to 204.9 billion KRW, and operating profit by 39.1% to 13.9 billion KRW. As Pokemon Bread’s contribution within the division grows, significant sales and profit growth is anticipated. In fact, after the launch of four new products (three refrigerated desserts and one bread) in early April, sales volume increased and the average selling price rose by about 7%, with quarterly sales of Pokemon Bread expected to exceed 36 billion KRW. The use of pre-stocked raw materials helped mitigate the burden of rising input costs.

Food division sales and operating profit are projected to increase by 15.2% and 27.6% to 197.6 billion KRW and 4.7 billion KRW, respectively. This reflects the effect of increased wheat flour supply prices and a base effect from last year’s operating losses in the rest area business due to the COVID-19 impact. The distribution division is also expected to maintain solid performance considering increased food material logistics volume, smooth price pass-through, and fixed cost reduction effects from logistics system advancement.