Calbee's Overseas Margin Recovery Likely Delayed by the New Product Strategies
We have lowered our fair value estimate of narrow-moat Calbee to JPY 4,100 from JPY 4,250 to reflect our more cautious view on its mid-term growth prospect of the overseas business. Margin recovery in the once-lucrative U.S. market was a key earnings driver behind our growth thesis. However, the company’s strategy to rely on new products, rather than the established brand, to accelerate top-line growth raises uncertainty around its earnings outlook. While we are convinced that Calbee’s dominant ...Calbee is mainly engaged in the manufacture and sale of snack confectionery, bakery product and cereal. Co.'s snack food includes potato-based snacks, such as potato chips under the names of "Potato Chips," "Jagarico," and "Jagabee;" flour-based snacks under the names of "Kappa Ebisen," "Sapporo Potato," "Sayaendo," and "Yaki Morokoshi;" and corn-based snacks under the names of "Mike Popcorn Butter Shoyu (butter and soy sauce) flavor," "Doritos," and "Cheetos." Co. provides cereal food under the name of "Fruit Granola" as well as bakery products such as pastries and sandwiches for retailer. In addition, Co. is also engaged in the logistics business.
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