[THE INVESTOR] SPC Samlip will be burdened by rising costs from its flour mill subsidiary Mildawon, said KB Investment and Securities on Oct. 16 lowering the target price to 160,000 won (US$141.84) from 170,000 won.
Its revenue in the third quarter will rise 2.5 percent on-year to 535.8 billion won and operating profit by 54 percent to 11.6 billion won, missing earnings expectations. Even factoring in the subsidiary’s cost burden, however, SPC will show the most noticeable profit improvement among food and beverage companies. Its cash cow bakery sector continues to grow through diversifying categories and channels while Egg Farm factory will turn to black as margins from food distribution improve, said analyst Park Ae-ran.
Mildawon’s ingredient prices have curbed further improvement in the third quarter but will ease away gradually, she added maintaining a “buy” recommendation.
By Hwang You-mee (firstname.lastname@example.org)