[Click eStock] "Nongshim, Q1 Earnings Expected to Rise... Buy Expansion"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 350,000 KRW for Nongshim on the 11th, expecting an earnings surprise in the first quarter.

It is estimated that Nongshim increased its factory operating rate by 30% compared to the normal level since mid-last month. While the overall ramen market is expected to benefit in the first quarter, Nongshim's growth rate is anticipated to be the highest among them.

The ramen market share by value in the first quarter is expected to have increased by 2.4% year-on-year to 56.3%. With the January ‘Rakkinam’ PPL, the advertising effect of ‘Parasite,’ and the mid-February rise in operating rates due to the novel coronavirus infection (COVID-19), all products are expected to show steady sales growth.

Accordingly, Nongshim's consolidated sales and operating profit for the first quarter are estimated to have increased by 8% and 26% year-on-year to 635.4 billion KRW and 40.1 billion KRW, respectively.

Sim Eun-joo, a researcher at Hana Financial Investment, said, “Considering that the profit contribution from the Chinese subsidiary was limited, the profit leverage effect of the Korean subsidiary will have a significant impact on the improvement of consolidated profits,” adding, “The favorable trend of the Korean subsidiary is expected to continue until the first half of the year.”

Researcher Sim also explained, “Domestic companies in the first quarter are unlikely to show earnings surprises due to COVID-19,” and “Considering that Nongshim has been undervalued in the domestic stock market so far, it is necessary to increase its weighting.”

This content was produced with the assistance of AI translation services.