1. Neocrema’s H1 2025 Performance: What Happened?
Neocrema reported revenue of KRW 21.4 billion and operating profit of KRW 3.2 billion in H1 2025, surpassing market estimates by 2% and 14% respectively. However, net income fell short of expectations at KRW 1.4 billion.
2. Drivers of Performance: Why These Results?
The remarkable growth in the peptide business fueled the increase in revenue and operating profit. Notably, sales of low-molecular-weight yeast hydrolysate surged by 88.8% year-over-year, demonstrating success in the Japanese market and potential for expansion in the US and Europe. Conversely, the lower net income is likely attributable to increased costs in other business segments or one-off factors. The year-over-year decrease in operating profit (based on the semi-annual report) is a result of increased cost of sales, SG&A expenses, and investment activities.
3. Investment Strategy: What’s Next?
While Neocrema has demonstrated the growth potential of its peptide business, it faces the challenge of managing profitability. Investors should focus on the following:
- Sustainability and expansion strategy of the peptide business
- Clear understanding of the reasons for the decline in net income
- Profitability strategies for business diversification
- Exchange rate and cost management strategies
- Efforts to improve efficiency in the functional sugar segment
4. Action Plan for Investors: What to Do?
Neocrema’s future hinges on the successful expansion of its peptide business and improvement in profitability. Investors should closely monitor future earnings announcements and management’s business strategies, making investment decisions with a long-term perspective.