[Click eStock] "Binggrae, Growth Potential Exceeding Expectations Remains Valid... Target Price Up"

Target Price Raised from 100,000 Won to 120,000 Won

Hi Investment & Securities raised the target price for Binggrae from 100,000 KRW to 120,000 KRW on the 29th, viewing the growth potential as exceeding expectations. The investment rating was maintained at 'Buy.'

Lee Kyung-shin, a researcher at Hi Investment & Securities, explained, "The target price was raised due to changes in operating performance estimates and adjustments to the target multiple. Considering the current stock price, it is necessary to keep in mind the possibility of an expanded valuation premium related to the visible improvement in domestic and international operating performance. Given that this category responds quickly to consumption improvements related to further economic recovery, we judge that the growth potential exceeding expectations remains valid."

Hi Investment & Securities forecast that Binggrae's sales and operating profit in the second half of this year will grow by 5.3% and 11.4%, respectively, compared to the same period last year. The researcher said, "From the second quarter, as the leverage effect expands compared to the peak season, sales growth is expected in both refrigerated and frozen sectors domestically and internationally. Coupled with the ongoing profit improvement trend and reduced cost burdens since last year, strong performance is expected despite the high base effect from the previous year. We also keep the possibility of upward revisions to estimates open."

It is important to note that both domestic and international refrigerated and frozen sectors continue to show strong performance. In the domestic market, despite rising input costs such as crude oil, sales of key products in the refrigerated sector remain solid, and the reduction of low-profit sectors combined with cost efficiency improvements is expected to have a positive impact on profit improvement. The researcher added, "The second and third quarters are periods when the contribution of ice cream to overall operating performance expands. Considering seasonality, margins are expected to rise compared to the off-season due to the operating leverage effect related to increased utilization rates. The consolidated subsidiary Haitai Ice Cream also needs to be considered seasonally, and its profit contribution is expected to be at a meaningful level."

Annual overseas sales this year are expected to grow by 17.9% compared to the previous year. The researcher said, "The overseas sector, which has recently maintained high growth, is expected to expand its contribution to operating performance by securing local market dominance in the mid to long term. It is also noteworthy that the portfolio is expanding to other products as the main export products have already established themselves in key regions."