ResearchAlum "Top 3 Beneficiaries of Sugarflation"

Research Alume predicted on the 23rd that sugarcane prices will rise for the time being due to global climate change and food export restrictions.

Researcher Ham Tae-yoon of Research Alume explained, "India, a sugar-producing country, has a production volume of 36.88 million tons," adding, "The Indian government has limited annual sugar exports to 10 million tons in response to food inflation."

He continued, "Brazil's sugar production last year is estimated at 35.35 million tons," and added, "Sugar harvests are greatly affected by the climate."

He analyzed, "Recently, the United Nations World Meteorological Organization expects El Ni?o to occur this year," and said, "El Ni?o, which started in April, causes droughts in India and Southeast Asia, and in India, April to May is the sugarcane planting season." Furthermore, he emphasized, "El Ni?o is expected to have an adverse effect on sugarcane, rice, and coffee production in the Asian region," and "This will be reflected in domestic sugar prices, consumer prices, and dining-out costs."

Researcher Ham explained, "Interest is growing in companies that can gain reflexive profits from the global sugarflation (sugar + inflation) phenomenon," and said, "Companies using sugar as a raw material are attracting attention."

He analyzed, "Because the rise in raw material prices leads to product price increases, improving profitability is possible," and "Suppliers of sweeteners that can replace sugar such as aspartame, sucralose, and oligosaccharides, as well as companies producing low-calorie and low-sugar products using substitutes, are also expected to benefit."

He cited Daehan Sugar, Neocrema, and Binggrae as beneficiary stocks. Researcher Ham said, "Daehan Sugar is one of the top three sugar-producing companies in Korea," and "With the increase in sugar prices reflected in selling prices, profitability improvement is expected." He also predicted, "Neocrema is a functional sugar production company, and alternative demand will increase."

Researcher Ham also expressed expectations that "Binggrae's sales will increase due to price hikes of existing products such as Banana Flavored Milk, Together, and Melona."