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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] On the 19th, Hyundai Motor Securities reported that Dongwon F&B (049770) is experiencing deteriorating performance due to sluggish industry conditions. The firm maintained a "Buy" rating but lowered its target price from KRW 52,000 to KRW 50,000. The previous day’s closing price was KRW 32,100.
For Q3, Dongwon F&B posted consolidated revenue of KRW 1.2203 trillion, a 1.1% year-on-year increase, and operating profit of KRW 66.9 billion, up 6.1%. The food segment benefited from steady growth in holiday gift sets, but sales growth was limited due to slowing consumption of key products like canned tuna and meat products.
However, improved tuna prices positively impacted the operating profit in the food segment. The foodservice and sauce sectors of the seasonings and distribution division performed well, while profits declined in the meat business due to weak high-margin dining-out channels. In the feed segment, both livestock numbers and prices worsened, leading to reduced sales.
Hyundai Motor Securities forecasted Dongwon F&B’s 2024 consolidated revenue to grow 2.9% year-on-year to KRW 4.5751 trillion, with operating profit increasing by 8.3% to KRW 198.6 billion. The outlook considers broader economic challenges in the food and beverage sector, increased promotional expenses to address distribution channels, and potential improvements in the dining-out business if the restaurant industry recovers. The seasoning and distribution segment is expected to maintain strong performance, driven by “lunchflation” trends, while the meat business may improve as low-cost imported meat inventories decrease.
The reduced target price reflects adjustments to earnings estimates based on weak domestic economic conditions. Hyundai Motor Securities noted, “Despite visible impacts from domestic economic slowdowns on the food and dining-out sectors, the company’s stable portfolio and improved cost structure due to lower tuna prices through the first half of 2025 enhance its valuation attractiveness.”
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
