Sajodongaone

Sajo Dong-A One traces its roots to Chosun Flour Mills, founded in 1953, and went through Dong-A Flour Mills and Dong-A One before joining the Sajo Group in 2016 and merging with Korea Flour Mills in 2017. The company operates across three segments: flour milling, biological resources (feed), and pet food.

By revenue, flour-related products account for roughly 63.3% and compound feed products for roughly 31.4%, with flour and feed merchandise sales adding a few percentage points each.

The flour business has diversified into premium, all-purpose, cake, and bread flours as well as organic, whole-wheat, domestic-wheat, and buckwheat flours, while the feed business supplies products for chickens, pigs, cattle, dogs, cats, and fish.

Pet food, launched under the "Venty" brand in 2020, is positioned as an emerging growth area tied to the expanding pet market.

Ownership is concentrated within the Sajo Group, with affiliates Sajo Seafood and Sajo Daerim each holding 26.03%, and the top five shareholders together controlling 64.88%, reflecting a vertically integrated structure that supplies flour to the group's other food affiliates.

The domestic flour and feed industries are generally viewed as mature, oligopolistic markets dominated by a handful of large players.

Consolidated revenue has stayed in a KRW 630-680 billion range for four straight years: KRW 631.6 billion in 2022, KRW 678.5 billion in 2023, KRW 678.1 billion in 2024, and KRW 674.3 billion in 2025.

Operating profit improved from KRW 15.3 billion (2.4% margin) in 2022 to KRW 38.6 billion (5.7%) in 2023 and KRW 50.0 billion (7.4%) in 2024, before slipping to KRW 42.5 billion (6.3%) in 2025. The bigger issue is the bottom line.

Net income attributable to owners was modestly positive from 2022 to 2024 at KRW 1.0 billion, KRW 10.7 billion, and KRW 24.3 billion respectively, but reversed to a large net loss of KRW 137.3 billion in 2025.

This stemmed from a provision booked ahead of a fine imposed by the Korea Fair Trade Commission for flour-price collusion, making it more of a one-off charge than a reflection of underlying operating deterioration.

On a quarterly basis, the company still posted profits of KRW 11.4 billion and KRW 8.1 billion through the third quarter of 2025, before a concentrated net loss of KRW 164.2 billion hit in the fourth quarter.

The first quarter of 2026 swung back to a KRW 4.9 billion profit, but the second quarter fell into another net loss of KRW 13.1 billion, suggesting fine-related costs are being recognized across multiple quarters.

Operating margin over the last five quarters has declined in sequence from 6.51% to 6.45%, 5.84%, 3.96%, and 2.84%, indicating that underlying profitability has softened independent of the one-off charge.

On a more positive note, operating cash flow remained positive at KRW 37.8 billion in 2025, showing the company's actual cash generation held up relatively well despite the accounting net loss.

The domestic flour milling industry is considered a mature sector, with demand pressured by demographic shifts and dietary diversification while imported flour competition intensifies. The feed segment faces similar external pressure from rising imported meat volumes and periodic livestock disease outbreaks.

Because most raw materials are imported, international grain prices and exchange-rate swings directly affect costs across the industry. At the same time, the organic and functional flour market is emerging as a new growth driver, offering a potential differentiation opportunity for companies with premium product lines.

The domestic flour market remains an oligopoly dominated by a small number of large players, and Sajo Dong-A One's stable supply relationship with its group's food affiliates is one element of its competitive positioning.

The 2026 Korea Fair Trade Commission decision to fine seven flour milling companies for collusion illustrates intensifying regulatory scrutiny of industry pricing practices, which could influence pricing and volume policies across the sector going forward.

The company showed signs of moving past the one-off shock from its collusion-fine provision with a return to profit in the first quarter of 2026, but the second-quarter net loss suggests full normalization will take more time.

Given the gap between the finally confirmed fine (KRW 183.0 billion) and the previously booked provision (KRW 167.2 billion), additional cost recognition in coming quarters cannot be ruled out.

The pet food business, cultivated as a new growth driver, continues to see revenue growth on the back of an expanding pet care market. Expansion of premium product lines such as organic and functional flour could also serve as a point of differentiation in an otherwise stagnant domestic flour market.

Financially, given the sharp reduction in equity and rise in the debt ratio following the 2025 loss, the pace of capital rebuilding through future earnings accumulation is a key point to monitor.

The company has stated it has not established a formal mid- to long-term shareholder return policy over the past three years, making any future value-up policy announcement another item worth watching.

With the 10-for-1 share consolidation completed in September 2026, changes in the number of shares in circulation and trading patterns following the consolidation also warrant attention.