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E-commerce

Diet boom drives Foodnamoo to hit 52-week high

Foodnamoo's share price has been reaching all-time highs repeatedly since July

By Aug 11, 2021 (Gmt+09:00)

Chicken breasts are in high demand due to the diet boom in South Korea
Chicken breasts are in high demand due to the diet boom in South Korea

South Korea-based Foodnamoo Inc., the operator of diet product platform Rankingdak.com, has hit a new 52-week high as its share price closed at the daily upper limit of 47,600 won ($41) on Aug. 10, a 29.88% increase from the previous trading session.

Foodnamoo operates Rankingdak.com, the country's leading platform for chicken breast products with around 90% of domestic chicken breast brands available on the website. The company also runs a fitness product platform, Gaegeunjil.

Since last month, the company's share price has been hitting new 52-week highs repeatedly, surging by 78.61% compared to early July.

Market watchers say that the company’s strong second-quarter earnings drove the company's share price to reach the daily upper limit on Tuesday.

According to Foodnamoo, its Q2 sales logged 50.6 billion won ($43.8 million), up by 66.1% compared to the year-earlier period. Its operating profit stood at 1.5 billion won, above the market consensus of 1.3 billion won.

In particular, investors have been taking note of the drastically increasing number of Foodnamoo's subscribers. In 2014, the platform had around 80,000 users, which has skyrocketed to 1.86 million users as of the end of July this year. The company also reported a 63.8% annual average growth rate of subscribers between 2014 and 2019.

Following the strong growth trend, industry watchers expect the platform to secure around 2.15 million users by the end of this year, up by 47% compared to the previous year.

The platform’s explosive growth in membership is owing to dieting becoming a fixed culture in Korean society recently alongside online purchases of food products becoming more common due to the global pandemic.

“Amid the fierce competition between food platforms, Foodnamoo was able to successfully set itself apart by making use of keywords such as ‘diet’, ‘fitness’ and ‘bodygoal’, which effectively targeted the younger generation,” said Lee Hwan-wook, an analyst at IBK Securities Co.

Industry watchers also say that Foodnamoo would’ve fetched a higher valuation if it had gone public recently instead of 2018 considering that many e-commerce companies have been applying a price to sales ratio of over 3 times despite not being able to reach the break-even point.

“Foodnamoo may have received an enterprise value of over 600 billion won if it remained an unlisted company,” said Hong Se-jong, an analyst at Shinhan Investment Corp. As of Aug. 10, Foodnamoo's market capitalization stands at around 324 billion won.

Write to Sung-mi Shim at smshim@hankyung.com

Danbee Lee edited this article.
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