1. What Happened? : Udeumji Farm’s Q2 2025 Earnings Analysis

Udeumji Farm recorded sales of KRW 18.5 billion, operating profit of KRW 1.2 billion, and net income of KRW 0.5 billion in Q2 2025. Both operating profit and net income turned to black compared to Q1, but sales and net income decreased year-over-year. Especially since the operating profit decline was significant compared to the same period last year, it remains to be seen whether this return to profitability will lead to a trend reversal.

2. Why These Results? : Analyzing the Drivers of Profitability and Risk Factors

The main factor contributing to the return to profitability is presumed to be a decrease in SG&A expenses compared to the first quarter. However, persistently high SG&A and logistics costs, and increasing debt ratio due to rising borrowings, remain risk factors to consider when investing. In particular, the increasing trend of stock-based compensation and logistics expenses could hinder profitability improvement.

3. What’s Next? : Future Outlook and Key Observation Points

The long-term growth potential remains valid based on its smart farm technology and the competitiveness of the ‘Tomango’ brand. However, short-term profitability improvement depends on SG&A expense management, new business performance, and efforts to improve financial soundness. Fluctuations in interest rates and exchange rates will also be key variables.

  • Key Observation Points:
  • – SG&A expense management, especially stock compensation and logistics costs.
  • – Performance of new products and food processing business besides ‘Tomango’.
  • – Management of borrowings and improvement of financial structure.
  • – Strategies to address fluctuations in interest rates and exchange rates.

4. What Should Investors Do? : Investment Strategy

The current investment opinion on Udeumji Farm is ‘Neutral’. While the return to profitability in Q2 is positive, careful investment decisions should be made considering the sustainability and risk factors comprehensively. It is crucial to continuously monitor the key observation points mentioned above and confirm whether it’s a trend reversal through future earnings announcements.