[Click eStock] "Binggrae Expanding Overseas Sales... Potential for Value Premium"

Overseas Sales Proportion 10.5% in 2023

Daishin Securities evaluated on the 19th that Binggrae's domestic market sales of mega brands remain solid, while overseas sales are steadily expanding. Accordingly, they newly issued a 'Buy' investment rating with a target price of 120,000 KRW.

Jung Hansol, a researcher at Daishin Securities, stated, "With growing interest in the growth potential of K-Food, if the rapidly growing export sales expand to a meaningful proportion, a valuation premium is expected."

Researcher Jung explained, "Over the past five years, overseas sales have steadily expanded with an average annual growth rate of 19%. On a separate basis, the proportion of overseas sales increased from 7.8% in 2020 to 10.5% in 2023." He added, "We expect overseas growth to continue through diversification of flavors in flagship products like Banana Flavored Milk and Melona, expansion of ice cream SKUs, and increased store channel presence."

The domestic market has continued to grow since the pandemic, driven by the Zero market. Expectations for market share expansion are rising through product category expansion, such as launching new Zero ice cream products ahead of the peak season.

Researcher Jung analyzed, "Due to the peak season effect, high profitability is realized in the 2nd and 3rd quarters. Cost ratios improved through overseas sales expansion, stabilization of raw material costs excluding raw milk, and the elimination of low-profit products, achieving record-high profitability as of the first quarter."

He predicted, "Although raw milk prices may rise in the second half, cost efficiency is continuously improving, and profitability is expected to continue improving with the expansion of overseas sales."

Meanwhile, Daishin Securities forecasted Binggrae's consolidated sales for the second quarter to increase by 4.1% year-on-year to 404.8 billion KRW, and operating profit to rise by 9.1% to 50.5 billion KRW. Regarding exports, growth was observed centered on ice cream in the U.S. and refrigerated products in China.