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Nongshim Headquarters (Image courtesy of Nongshim) |
[Alpha Biz= Paul Lee] IBK Investment & Securities stated on June 24 that Nongshim is expected to slightly exceed consensus estimates for its second-quarter earnings, projecting consolidated revenue of KRW 925.4 billion and operating profit of KRW 52.7 billion. The firm maintained a “Buy” rating with a target price of KRW 500,000.
Analyst Kim Tae-hyun of IBK commented, “Considering improving domestic consumption due to government relief funds, price hikes in the U.S., and a rebound in Chinese online sales, this is an opportune time to buy.”
Kim further noted, “The domestic business is estimated to post KRW 662.8 billion in revenue and KRW 24.5 billion in operating profit. While volume recovery in Korea remains limited, the average 7.2% price increase in ramen and snack products implemented in mid-March, along with expanding exports to markets such as Malaysia and Hong Kong, are expected to support earnings.”
In North America, revenue and operating profit are projected at KRW 167.4 billion and KRW 18.1 billion, respectively. “Since April, Shin Ramyun Tumba has been stocked in about 20% of Walmart locations across the U.S., and its distribution expanded in May to Costco stores in Los Angeles,” he added.
Looking ahead, he said, “Further expansion into mainstream retail channels like Kroger is expected in the second half of the year, and a ramen price hike—the first in nearly three years—is scheduled for Q3. Concerns over profitability due to increased promotional spending appear limited.”
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
