[Click e-Stock] "Shinsegae Food's Operating Profit to Grow 79.9% in 2025"

On June 20, IBK Investment & Securities forecasted that Shinsegae Food's operating profit for this year would grow by 79.9% compared to last year.

Nam Sung-hyun, a researcher at IBK Investment & Securities, cited five reasons for the expected earnings growth: the effects of restructuring focused on profitable channels; growth potential through changes to the standard model of the dining franchise division; increased orders and improved profitability in group catering; the effects of eliminating unprofitable subsidiaries; and a low base effect due to one-off expenses incurred last year.

Nam explained, "Despite sluggish economic conditions, the company achieved strong first-quarter results thanks to efficient control of promotional expenses and a shift toward high-margin channels. We expect this growth trend to continue throughout the year," adding, "We estimate second-quarter sales and operating profit at 399.7 billion won (up 1.5% year-on-year) and 12.4 billion won (up 27.9% year-on-year), respectively."

He also highlighted the possibility of a transformation in Shinsegae Food's business structure. Nam stated, "Although the company achieved relatively stable growth due to its high dependence on group affiliates, its growth potential weakened as discount stores slowed. The company has worked to reduce the proportion of captive group catering and sought to expand its dining-out division through NBB (No Brand Burger)."

He added, "The company is pursuing a strategy to increase the share of bakery supply based on par-baked (rapidly frozen) bread. We assess that this expansion into external channels is a strategy that can enhance the company's growth potential."

Nam maintained a 'Buy' investment rating and a target price of 58,000 won for Shinsegae Food.