[Click eStock] "Kyochon F&B Lowers Q1 Earnings Estimates"

On the 16th, IBK Investment & Securities downgraded its investment opinion on Kyochon F&B's first-quarter earnings from 'Buy' to 'Trading Buy,' a neutral stance, anticipating that the results will fall short of market estimates. However, the target price was maintained at 6,250 KRW.

IBK Investment & Securities projected that Kyochon F&B's consolidated first-quarter sales would reach 120.6 billion KRW, a 6.4% increase year-on-year, meeting expectations. However, operating profit is estimated at 11.3 billion KRW, a 5.2% decrease compared to the same period last year, falling short of expectations. Analyst Nam Seong-hyun stated, "Despite the effects of the franchise regional headquarters transition and a slowdown in the dining-out market, sales are expected to grow relatively due to the launch of new products and steady related demand. However, profit growth is likely to be challenging due to increased fixed costs from the franchise regional headquarters transition, continued losses from key subsidiaries such as overseas corporations and K&L Pack, and additional bad debt expenses from business partners."

However, from the second quarter onward, profit growth potential is expected to be high. This is due to anticipated reductions in event expenses following the conclusion of sports events, expected efficiency improvements at K&L Pack, and a base effect from last year's franchise regional headquarters transition.

The main reason for the change in investment opinion was the stock price increase. Kyochon F&B's stock price has steadily risen since early February. He added, "We still view Kyochon F&B positively and are focusing on the point when overseas business growth, improvement in key subsidiaries' performance, and additional core business performance growth are demonstrated."