1. What’s Happening? Samdasu Distribution Rights Expiring
In May 2025, a report by ChosunBiz revealed the possibility of Kwangdong Pharmaceutical losing its distribution rights for Jeju Samdasu. Kwangdong confirmed its participation in the bidding process but stated the outcome is yet to be determined. The final decision will be announced before August 22nd.
2. Why Does it Matter? Heavy Reliance on Samdasu
Samdasu is a core product in Kwangdong’s F&B sector, accounting for a significant portion of its revenue. Losing the distribution rights would inevitably lead to a decline in sales, and combined with its dependence on Coupang (14.1%), profitability could worsen considerably. Given the current low operating profit margin of 1.2%, rising raw material prices, and increasing SG&A expenses, the loss of Samdasu could severely impact the company’s fundamentals.
3. What’s Next? Scenario Analysis
- Worst-case scenario: Complete loss of distribution rights would lead to a sharp decline in sales, deteriorating profitability, and a drop in stock price.
- Mid-case scenario: Retaining partial distribution rights would mitigate the sales decline but limit profitability improvement.
- Best-case scenario: An unexpected strategic partnership securing the rights or a more favorable contract could lead to a rise in stock price.
4. What Should Investors Do? Proceed with Caution
A cautious approach is recommended until the official announcement on August 22nd. It’s advisable to review the announcement and assess the future business outlook before making any investment decisions. Long-term investors should continuously monitor the performance of Healthport acquisition, solar power business, and risk management system.
Q: What is the impact of losing Samdasu distribution rights on Kwangdong Pharmaceutical?
A: As Samdasu represents a significant portion of Kwangdong’s revenue, losing the rights could lead to a decline in sales and profitability, potentially impacting stock price.
Q: How are Kwangdong Pharmaceutical’s other businesses performing?
A: While Kwangdong is pursuing new businesses such as Healthport acquisition and solar power generation, it still heavily relies on Samdasu sales. Continuous monitoring of other business growth is essential.
Q: How should investors respond to this situation?
A: Investors should proceed with caution until the official announcement on August 22nd. Careful consideration of the announcement and analysis of future business prospects are crucial for informed investment decisions.
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