April 26, 2024

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[THE INVESTOR] Maeil Dairies is generating expectations from the rise in prices of its products, said Hana Financial Investment on Oct. 19 maintaining a “buy” recommendation and 125,000 won (US$109.92) target price. 

Namyang Dairy Products has followed Seoul Milk in raising the price of processed milk by 4.5 percent, following the rise in raw milk prices. Maeil’s annual purchase of raw milk is estimated to cost 400 billion won, and when it decides to raise the price of processsed milk, it will be able to dilute the cost burden and improve earnings. There could be a 7 percent gain in operating profit next year, said analyst Shim Eun-ju.

Thanks to favorable weather, its third-quarter earnings will satisfy market consensus, she said, estimating 347.3 billion won revenue on a standalone basis and 21.8 billion won operating profit. Its current stock price is attractive trading only at 10 times its price-earnings ratio, the analyst added.

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