[Alpha Biz= Paul Lee] DS Investment & Securities has reiterated its “Buy” rating on snack and confectionery maker Orion Corp. (KRX: 271560) with a target price of KRW 160,000, citing expected growth in overseas earnings driven by capacity expansion in Vietnam, Russia, and Korea, along with improved shareholder return policies.



According to analyst Jang Ji-hye on June 18, Orion's consolidated revenue for May rose 9% YoY to KRW 269.9 billion, while operating profit remained flat at KRW 45.5 billion, yielding a solid operating margin of 16.9%.



By region, revenue grew 6% in Korea, 3% in China (+0.4% local currency), 1% in Vietnam, and a robust 70% in Russia (+47% local currency). Despite rising raw material costs (e.g., cocoa, shortening) and increased marketing for new product launches, Orion defended margins through higher shipment volumes.



In Korea, domestic demand slowed and traditional trade (TT) channel sales declined, but growth was supported by summer product launches and rising exports to the U.S. In China, promotional discounting by competitors during the April–May holiday season limited Orion’s growth, but normalization is expected as those promotions wind down in June.



Vietnam experienced slower growth due to delayed domestic shipments and reduced exports to Iran, while rising material costs and a shift to value-for-money bulk products affected profitability. In contrast, Russia showed continued double-digit sales growth in pies and biscuits, with plant utilization exceeding 120%, although profit margins were pressured by higher input and marketing costs.



Jang noted that Orion’s overseas revenue share is projected to reach 68% by 2025, positioning it as a top-tier competitor in Korea’s food and beverage sector. Despite prolonged challenges in China and Vietnam, growth in U.S. exports and strong Russian sales are expected to offset regional weakness.

 

 

 

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