Hyungkuk F&B

Founded in 2008 and listed on KOSDAQ in 2015, Hyungkuk F&B is a food and beverage ODM/OEM specialist whose B2B-centered business supplies beverage bases, coffee, and desserts to coffee and dining franchises as well as retailers.

The company operates as an ODM supplier to domestic café outlets, having internalized the entire process from raw material sourcing through manufacturing, distribution, and sales.

Most products are consumed through coffee and dining franchises and independent cafés, with a high share of revenue concentrated among large accounts such as Starbucks, Ediya, Dunkin Donuts, A Twosome Place, and E-mart.

According to Hana Securities research, the recent revenue mix is estimated at roughly 65% B2B and 35% B2C.

Taylor Farms, acquired in 2021, holds exclusive Asian distribution rights for Taylor Brothers Farms of the U.S. and reportedly holds the leading domestic market position in dried fruit (prunes), giving the group B2C brand capabilities distinct from its core ODM business.

The company also consolidates subsidiaries including Morning Dew F&B, a Shanghai trading unit, Marathuz, and Nava Asia, in which it holds stakes of 75% to 100%.

Its product range spans coffee beans, cold brew, and capsule coffee; gelato and sorbet bases; beverage syrups and concentrates; RTD juices; and frozen desserts and bakery items.

The firm has built competitiveness in the premium beverage-base segment through proprietary technology including non-thermal high-pressure processing (HPP) sterilization equipment.

It competes against numerous small and mid-sized beverage-base ODM suppliers domestically, and its revenue is directly sensitive to whether large franchises adopt its products for seasonal menu items.

Full-year 2025 revenue came to KRW 99.38 billion, down 3.2% from KRW 102.62 billion in 2024, while operating profit fell 20.6% from KRW 10.74 billion to KRW 8.53 billion, pushing the operating margin down from 10.5% to 8.6%.

Owner net income, however, rose 51.5% from KRW 5.13 billion to KRW 7.77 billion, consistent with disclosed information that the decline in revenue was accompanied by an increase in net income driven by valuation gains on unlisted equity, suggesting non-operating items drove the bottom-line improvement rather than the core business.

Looking further back, owner net income declined for three straight years from KRW 11.94 billion in 2022 to KRW 8.55 billion in 2023 and KRW 5.13 billion in 2024 before rebounding in 2025, while the operating margin held in the 10%-plus range from 2022 through 2024 before slipping into the 8% range in 2025.

On a quarterly basis, revenue rose from KRW 25.36 billion in Q2 2025 (operating margin 11.1%) to KRW 28.58 billion in Q3 2025 (10.7%), a modest margin dip despite higher sales, before Q4 revenue fell to KRW 21.17 billion with operating profit collapsing to KRW 0.48 billion (2.3%).

Entering 2026, Q1 revenue shrank further to KRW 20.81 billion with operating profit of KRW 1.01 billion (4.9%) and owner net income of just KRW 0.13 billion, before Q2 revenue recovered to KRW 26.09 billion, though operating profit reached only KRW 1.43 billion (5.5%) and owner net income only KRW 0.47 billion.

Notably, Q2 2026 revenue slightly exceeded the year-earlier quarter, yet the operating margin nearly halved from 11.1% to 5.5% and owner net income fell sharply from KRW 2.64 billion to KRW 0.47 billion, revealing a gap between the pace of revenue recovery and profitability recovery.

Annual operating cash flow remained positive across all four years — KRW 7.53 billion in 2022, KRW 8.65 billion in 2023, KRW 9.58 billion in 2024, and KRW 8.98 billion in 2025 — indicating a comparatively stable cash-generation base despite net income volatility.

The debt ratio stayed within a 110%-130% range with no major swings: 126.6% in 2022, 114.7% in 2023, 127.6% in 2024, and 125.6% in 2025.

Hyungkuk F&B's core market is the domestic beverage-base and ingredient ODM market serving café and dining franchises, so results are closely tied to whether major franchises adopt seasonal menu items and to overall growth in the café industry.

Korea's coffee and café market has matured, with the pace of new store openings slowing relative to earlier years, prompting individual ODM suppliers to compete by expanding into higher value-added categories such as new menus, seasonal beverages, and desserts.

More recently, the 'Dubai chewy cookie' trend, an offshoot of the earlier Dubai chocolate craze, has spread to domestic bakery and café franchises, lifting demand for dessert ingredients such as pistachio spread, with major brands including Paris Baguette and Dunkin expanding related categories.

However, Hana Securities noted that bakery trends average about three months, making the durability of the trend a key question.

On the raw-material side, the industry is sensitive to swings in international coffee bean and fruit ingredient prices, and in the past, suppliers of alternative ingredients such as beverage bases and syrups have at times been expected to benefit when green coffee prices rose.

In the B2C segment, wellness trends such as low-sugar, low-calorie desserts and health-oriented smoothies and juices continue to spread, fueling ongoing new product competition.

Competitively, Hyungkuk F&B is seen as having built entry barriers through more than two decades of relationships with large franchises, quality certifications such as HACCP and FSSC22000, and HPP equipment, though numerous small and mid-sized beverage-base and dessert ODM suppliers exist domestically, sustaining price competition pressure.

On April 1, 2026, the company disclosed a corporate value-up plan setting goals to raise revenue and operating profit by meeting core business targets, expand its new-growth portfolio, and maintain or strengthen its dividend policy based on earnings.

Specific initiatives included expanding ODM client revenue, extending sales channels to dining outside cafés, expanding mid-to-low-price beverage base sales, and entering the smart manufacturing equipment business for cafés and dining, alongside cultivating new strategic products.

On dividends, the company stated it would use funds secured through treasury share disposal to pay cash dividends, maintaining or expanding the payout.

Operationally, in response to the 'Dubai chewy cookie' trend that spread from late 2025, Hana Securities research reported that starting in February 2026 the company expanded direct overseas imports of pistachio spread, a key ingredient, to scale up domestic distribution.

However, actual first-half 2026 results show revenue recovering only modestly while operating margins remained below year-earlier levels, suggesting the profitability impact of the dessert trend has not yet been clearly confirmed in the numbers.

The company also showcased new products at the April 2026 Seoul Coffee Expo, including four new real-base products aligned with pistachio and hojicha menu trends, continuing to expand its product portfolio.

Expanded overseas distribution through Taylor Farms into Southeast Asia and Japan is cited as one of the company's medium-term growth pillars, though specific, up-to-date export disclosures warrant further confirmation.