[Click eStock] "Kyochon F&B Peak Season Arrival... Target Price 13,000 Won"

On the 15th, Eugene Investment & Securities maintained a target price of 13,000 KRW and a buy rating for Kyochon F&B.

Kyochon F&B reported consolidated sales of 120.4 billion KRW and operating profit of 5.9 billion KRW in the first quarter, representing a decrease of 8.2% in sales and 32.4% in operating profit compared to the same period last year. These figures were slightly below market expectations.

Eugene Investment & Securities highlighted that despite a decline in franchise sales due to a contraction in the off-season delivery market, overseas business royalties and continuous sales from overseas subsidiaries showed steady growth in the first quarter. The stable growth of new business sales centered on eco-friendly packaging was also seen as a positive factor.

The decline in profitability in the first quarter was analyzed to be due to the impact of decreased domestic franchise sales despite cost improvements from reduced raw material procurement costs, as well as increased one-time selling and administrative expenses such as advertising and commission fees.

The expected results for the second quarter are sales of 138 billion KRW and operating profit of 5.3 billion KRW, with profitability expected to improve significantly.

The analyst stated, "While the cost improvement effect from reduced raw material procurement costs continues to be reflected, the increase in franchise stores and face-to-face activities is driving higher packaging and dine-in order volumes, and sales growth in overseas business and new business is also expected to continue."