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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Hana Securities has raised its target price for Samyang Foods from 900,000 KRW to 1.1 million KRW, citing an improved export outlook for this year and next. The brokerage firm maintained its "Buy" rating on the stock.
On Thursday, Hana Securities estimated that Samyang Foods’ consolidated sales and operating profit for the first quarter would reach 481.9 billion KRW and 99.6 billion KRW, respectively. The total ramen export value for January and February increased by 27.9% year-on-year, with exports to the U.S. and China rising by 22.7% and 117.5%, respectively. Despite the Chinese New Year holidays, export growth to China surged significantly, while demand in the U.S. remained strong.
The Milyang 2nd plant is set to begin trial operations as scheduled in May. Meaningful export growth is expected from the third quarter onward. Hana Securities noted that advertising and promotional expenses for brand building were significantly executed in the fourth quarter of last year, and as a result, the operating margin is projected to rise by 2.5 percentage points quarter-on-quarter, returning to the previous year's level.
Hana Securities has revised its export forecast for Samyang Foods this year to 1.8 trillion KRW, a 35.3% increase from last year. Analyst Sim stated, "A favorable exchange rate trend continues, and Mixed ASP (Average Selling Price) is rising as domestic distribution inventory is minimized. Given the steady popularity of Buldak in Google Trends and the company’s distribution expansion plans in China and the U.S., we expect meaningful export growth following the operation of the Milyang 2nd plant."
Currently, Samyang Foods is trading at a 12-month forward price-to-earnings ratio (PER) of 19 times. Analyst Sim added, "Although the recent sharp stock price increase may present short-term valuation concerns, we maintain a Buy & Hold strategy considering the long-term growth prospects."
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
