April 26, 2024

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[THE INVESTOR] Shinsegae Food has been weighed down by sluggish food distribution and dining industry, said KB Investment and Securities on Aug. 6, lowering the target price to 170,000 won (US$151.12) from 200,000 won.

Its operating profit in the second quarter slid 19.2 percent on-year to 6.9 billion won while revenue climbed up 2.4 percent to 310.3 billion won. Earnings were slower than expected, as overall sales from hypermarkets shrank and decline in price of imported foodstuff slowed down growth. The slump in dining industry and expanding losses due to minimum wage hike also dragged down the figures, said analyst Park Ae-ran.

The food company’s revenue in the third quarter will increase 6.5 percent on-year to 342 billion won while operating profit will slip 0.3 percent to 9.2 billion won. The food processing unit, however, will maintain solid growth in the latter half and operating margin, 3 to 4 percent points higher than the average for the whole company, is a positive. The unit will contribute 46.7 percent of the firm’s operating profit this year, up 6.6 percent point from last year, the analyst noted, maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)