Introduction of Alternative Food for Cafeteria Business
The author is an analyst of NH Investment & Securities. She can be reached at mj27@nhqv.com. -- Ed.
Pulmuone is to enjoy short-term earnings growth momentum from overseas subsidiaries, narrowing losses at the restaurant business, and alternative food market expansion. Long-term growth engines are also in place.
Overseas, cafeteria, and alternative food businesses emerging as growth drivers
We reiterate a Buy rating on Pulmuone with a TP of W25,000. In 2021, the company was unable to meet growing demand owing to a prolonging of Covid-19, supply bottlenecks, ocean freight rate upsurge, and local logistics disruptions. Also, its US subsidiary swung to an operating loss. From 2Q22, however, the subsidiary is likely to enjoy margin improvement backed by an expansion of local logistics and production systems. In addition, earnings at its restaurant business should rebound, and the company is forecast to make an active foray into the plant-based protein market.
Product portfolio ranging from tofu to meat alternatives
Pulmuone has penetrated into the alternative food market on several fronts. It is responding to higher plant-based protein demand through tofu products, its major focus. The US subsidiary has diversified its product portfolio and arenas following the launch of plant-based food brand Plantspired. In the domestic market, the firm has rolled out Bulgogi HMR products made of meat alternatives. Pulmuone participated in the series A funding round for BlueNalu, a cellular aquaculture company, and signed an MOU with the US firm regarding cellular aquaculture technology. In addition, in a move to more aggressively expand its alternative food sales, Pulmuone inked an MOU with foodstuff company Ingredion Korea to improve the quality of textured vegetable protein. The two firms plan to jointly research the development of plant-based protein.
Introduction of alternative food for cafeteria business
Mid-sized food catering companies such as Pulmuone are benefitting from the government’s restrictions on large firms’granting of rights to operate cafeterias for their own affiliates. Also, Pulmuone has sharpened its competitive edge by introducing a diverse range of alternative food products. Starting from three years ago, the company has offered vegetarian options at least once a week at major cafeterias, jumping on the bandwagon of the vegan boom. Such efforts have helped Pulmuone to secure cafeteria operation rights from an increasing number of large companies