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Nongshim headquarters. (Photo=Nongshim) |
[Alpha Biz= Reporter Kim Sangjin] Korea Investment & Securities has maintained a "Buy" rating and a target price of 540,000 KRW for Nongshim.
On the 9th, Korea Investment & Securities stated, "We expect Nongshim's third-quarter earnings to reach 880.2 billion KRW (up 2.8% year-on-year) in revenue and 53.8 billion KRW (down 3.3%) in operating profit, falling short of market expectations." They noted that the main reason for the operating profit falling below expectations is the poor performance of the domestic business.
They further estimated that the domestic business (standalone entity) would generate revenues of 691.9 billion KRW (up 4.9%) and an operating profit of 29.1 billion KRW (down 15.2%). They indicated that while domestic sales growth has been limited due to sluggish domestic consumption, revenue is expected to increase slightly due to a rise in exports. However, profitability is anticipated to decline year-on-year due to increased promotional expenses aimed at stimulating domestic consumption.
Korea Investment & Securities also projected that the overseas business would achieve revenues of 239.3 billion KRW (up 1.6%) and an operating profit of 23.1 billion KRW (up 31.0%). They expect the North American subsidiary to see a slower decline in average selling prices (ASP) due to changes in product mix compared to the first half of the year, along with improvements in cost burdens and yield at the second plant, which will enhance profitability. Additionally, they anticipate profitability improvements in the Chinese subsidiary as well.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
