[Edaily Reporter Shin Ha-yeon] On the 11th, Hana Securities stated that Pulmuone’s overseas subsidiaries are beginning to significantly reduce their losses, and predicted that expectations for improved overseas performance in the second half of the year will be reflected in the stock price. The firm did not provide an investment opinion or target price.

Shim Eun-ju, an analyst at Hana Securities, stated, “Overseas subsidiaries reached the break-even point (BEP) in the first quarter, driving an improvement in consolidated earnings,” adding, “As losses in the U.S. and Japan narrow and China maintains its profit trend, the profitability of overseas operations is expected to gradually improve.”

Pulmuone’s first-quarter consolidated revenue and operating profit were 850.4 billion won and 19.0 billion won, respectively, representing year-over-year increases of 7.2% and 68.9%. Double-digit growth in the domestic food service sector and improved profitability at overseas subsidiaries drove these results.

By business segment, the manufacturing division continued its revenue growth momentum, driven by new product sales and the expansion of B2B channels. The service division also saw simultaneous improvements in both revenue and profitability due to increased demand for institutional meals and catering.

In particular, the improvement in overseas operations was noted as being especially notable. Analyst Shim pointed out, “Combined revenue from overseas subsidiaries reached 188.6 billion won, a 13.1% increase year-over-year, and profitability recovered to break-even levels from a 5.3 billion won loss in the first quarter of last year.”

The U.S. subsidiary recorded sales of 136.2 billion won, an 18% increase year-over-year, and achieved break-even. Analysts attribute this to the expansion of tofu shipments to club channels, which began in the third quarter of last year, contributing to both sales growth and improved profitability.

The Japanese subsidiary is expected to see its deficit narrow in the second half of the year as cost-saving measures from ongoing factory consolidation take effect. The Chinese subsidiary recorded sales of 32.7 billion won, a 16.2% increase year-on-year, and is estimated to have maintained its profitable trend.

Analyst Shim projected this year’s consolidated revenue and operating profit at 3.5449 trillion won and 107.4 billion won, respectively. In particular, he forecast that the overseas subsidiaries’ deficit would decrease significantly from last year’s level of 16 billion won to around 6 billion won this year.

He explained, “The U.S. subsidiary is expected to continue reducing its deficit as the launch of new private-label (PB) tofu products and B2B noodle orders take full effect,” adding, “In Japan, the consolidation of production bases will support earnings improvement, while in China, a stable profit trend will do the same.”

He further assessed, “The current stock price is trading at a forward 12-month price-to-earnings (P/E) ratio of 9 times,” adding, “We expect expectations for improved overseas performance to be reflected in the stock price as we move into the second half of the year.”