[Click eStock] "S&D, Continued Earnings Growth... Very Attractive Stock Price"

On the 7th, KB Securities analyzed that S&D's stock price is undervalued compared to its continuous growth trend, having recorded its highest-ever performance.

Researcher Lim Sang-guk of KB Securities stated in a report on the same day, "The preliminary results for the fourth quarter of last year showed sales of 34.6 billion KRW (up 38.7% year-on-year) and operating profit of 6.4 billion KRW (up 53.8%), marking the best quarterly performance ever," adding, "The surprising record-breaking performance continues."

The cumulative annual performance also achieved an all-time high. For the year 2024, sales reached 116.1 billion KRW, a 31.6% increase compared to the previous year, operating profit was 20.1 billion KRW (+56.2%), and net profit was 17.2 billion KRW (+44.5%).

In particular, the popularity of Samyang Foods' Buldak Bokkeum Myun series in the global market led to a 45% increase in S&D's sales of general functional food materials (the key raw materials for sauces) compared to the previous year. Researcher Lim explained, "Along with the sales growth of core flagship products, the effect of reduced raw material and manufacturing costs maximized profitability, with the fourth-quarter operating margin reaching 18.5%."

The global growth of Samyang Foods' Buldak series has also positively impacted S&D. S&D exclusively supplies the key raw materials for the liquid and powder soup of Buldak Bokkeum Myun, and thus Samyang Foods' overseas market expansion directly translates into S&D's performance growth.

He added, "The global spread of K-content and the expansion of the K-food craze are driving increases in quantity (Q) and price (P) for our clients. In particular, the successful entry of our client's Buldak Bokkeum Myun into US retailers such as Walmart, Costco, and Target last year is leading the overseas market expansion and driving the client's top-line growth."

S&D is also expanding investments in preparation for growth. On December 3rd last year, it decided to invest approximately 16 billion KRW in factory expansion and production facility upgrades. Regarding this, Researcher Lim forecasted, "The effect of the expansion will fully materialize after the second half of 2025, becoming an additional factor for performance improvement."

As a future growth driver, diversification of the general functional food materials business is highlighted. Moving away from the existing B2B focus, S&D plans to launch high value-added finished products such as convenience foods and seasonings through B2C and private branding initiatives. Researcher Lim emphasized, "It is necessary to respond flexibly to changes in market trends."

The financial structure is also stable. As of the end of the third quarter last year, the retention ratio stood at 2977%, ROE was 27.3%, and cash equivalents amounted to approximately 32.3 billion KRW. Additionally, the company maintains a debt-free management approach, securing financial soundness.

The current stock price is trading at a price-to-earnings ratio (P/E) of 9.5 times based on last year's preliminary results, significantly discounted compared to the major clients' P/E of 22.4 times. Regarding this, Researcher Lim evaluated, "Considering the sound financial structure and additional growth, the current stock price is judged to be at an attractive level."