[Click eStock] "Reflecting Free Capital Increase... Kyochon F&B Target Price 6,250 Won"

On the 3rd, IBK Investment & Securities presented a target price of 6,250 KRW for Kyochon F&B, stating that "the increase in the number of shares due to the free capital increase has been reflected." The buy rating was maintained.

On the same day, Nam Seong-hyun, a researcher at IBK Investment & Securities, stated, "We believe that performance improvement in the fourth quarter of last year is possible. During this period, sales are expected to reach approximately 118.1 billion KRW, a 6.2% increase compared to the same period in 2023, and operating profit is expected to achieve about 10.5 billion KRW, a 46% increase."

Regarding the reason for expecting growth in fourth-quarter performance, he said, "With the completion of the franchise regional headquarters transition, both sales and profits will increase simultaneously," adding, "Despite the downturn in the dining-out market, chicken demand remains relatively robust." However, operating profit estimates were revised downward from the previous forecast due to temporary expenses (about 3 to 4 months) related to advertising and promotional expenditures in the fourth quarter.

Researcher Nam noted, "The fourth quarter is a period when dining-out demand relatively increases, but last year, consumption demand sharply declined due to expanded domestic and international uncertainties. However, since there was an intrinsic expansion of product margin rates and an increase in sales, the fundamental strength is expected to improve rather than deteriorate.

He added, "If last year was a period of fundamental structural improvement, this year will be a year to improve the basic strength through cost efficiency," and analyzed, "they plan to conclude sports sponsorships and are highly likely to further advance logistics network efficiency."

Furthermore, he predicted, "Such improvements are expected to begin from the first half of the year, with the scope expanding further from the second quarter," and "especially from the second half, the fundamental strength will be demonstrated." Operating profit for the first half of this year is estimated at about 25 billion KRW, and operating profit for the second half is estimated at 31.1 billion KRW, respectively.