[Click eStock] "Sajo Daerim, Significantly Undervalued Compared to Strengthened Fundamentals"

Hana Securities analyzed on the 8th that Sajodairim is undervalued compared to its potential for earnings improvement. They newly issued a 'Buy' investment rating and a target price of 160,000 KRW.

Sim Eun-joo, a researcher at Hana Securities, explained, "Sajodairim announced last November that it would acquire 100% of the shares of Ingredient Korea (now Sajocpk) for 340 billion KRW," adding, "It is a company that manufactures and sells starch syrup." She continued, "With the increasing demand for alternative sweeteners, the demand for starch syrup is expected to gradually increase," and added, "According to a global research firm, the global alternative sweetener market size is expected to grow at an average annual rate of 6% until 2026." She emphasized, "This year, Sajocpk is expected to contribute around 50 billion KRW in profit considering the stabilization of corn input prices and the end of royalty payments."

Researcher Sim analyzed, "Last month, they announced the acquisition of Foodist," adding, "Foodist has nationwide logistics coverage, enabling daily delivery across the country." She also added, "They own the private brand 'Sikjajaewang' and expect synergies from mid- to long-term integrated raw material purchasing, in-house manufacturing, and expansion of distribution channels."

It is estimated that Sajodairim will achieve consolidated sales of 2.5591 trillion KRW and operating profit of 191.8 billion KRW this year. This represents increases of 24.0% and 49.1%, respectively, compared to last year. Researcher Sim explained, "These figures do not yet reflect Foodist's performance," and added, "The significant profit growth this year is due to improved cost ratios and enhanced profitability of the core business through export expansion." She continued, "Sajocpk will achieve strong results thanks to the end of royalty payments and stabilization of grain input prices," emphasizing, "In the mid- to long-term, synergies can be expected from integrated raw material purchasing and manufacturing capacity enhancement with Foodist, as well as securing distribution channels."

She analyzed, "If Foodist's performance is fully reflected from next year, consolidated sales will approach 4 trillion KRW," and added, "The current stock price corresponds to a price-to-earnings ratio (PER) of only 5 times." She emphasized, "It is significantly undervalued compared to the strengthened fundamentals."