April 24, 2024

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[THE INVESTOR] Binggrae’s earnings will improve significantly, said Korea Investment on Sept. 3, upgrading the recommendation to a “buy” from a “hold” and suggesting 87,000 won (US$77.92) target price. 

While record-setting heat helped boost sales of frozen desserts, revenue also increased fundamentally from strengthening price competitiveness. Propelled by the sector, operating profit in the second quarter reached 21.9 billion won, widely beating 12.8 billion won market consensus. Earnings per share will rise 15 percent on average for at least two years, said analyst Lee Gyeong-ju. 

While demand for frozen desserts have apparently slowed down due to rising sales of beverages and takeaway coffee, their prices have continued to rise and ice creams have become one of the most affordable choices. 

Meanwhile its flagship product banana-flavored milk, being the most inexpensive among processed milk products, has large room to raise prices in the long term, said the analyst underlining that since it is the most popular brand at convenience stores, the increasing number of outlets should give it a boost. 

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