[Click eStock] "Orion, Strong Q1 Earnings Expected... Short-term Earnings Momentum Highlighted"

Hana Financial Investment Issues 'Buy' Rating and 130,000 KRW Target Price... Closing Price on 23rd at 94,700 KRW

Orion products (Photo by Asia Economy DB)

[Asia Economy Reporter Geum Bo-ryeong] Analysis suggests that Orion's strong first-quarter performance is expected to highlight short-term earnings momentum.

According to Hana Financial Investment on the 24th, Orion's consolidated first-quarter earnings are estimated at 530.8 billion KRW in sales and 80 billion KRW in operating profit. Compared to the previous year, these figures represent increases of 6.7% and 3.5%, respectively.

The China subsidiary is showing a different trend than expected. Eunju Shim, a researcher at Hana Financial Investment, stated, "We anticipated that the impact of the novel coronavirus (COVID-19) would be inevitable from February. However, as operations quickly resumed mainly through the discount store (MT) channel, Orion, which has a higher proportion of sales through the MT channel compared to competitors, appears to be benefiting indirectly. From a category perspective, demand has concentrated on pies and snacks, which Orion is relatively strong in, rather than gum and candy, which are weaker categories for Orion. This seems to have positively influenced Orion's performance. Despite a low base effect, the China subsidiary's sales and operating profit in the first quarter are expected to maintain last year's levels," she explained.

The Vietnam subsidiary is also expected to deliver strong results due to the base effect from inventory adjustments in the first half of last year and indirect benefits related to COVID-19.

Researcher Shim added, "With strong first-quarter results anticipated, short-term earnings momentum is expected to be highlighted. This year is likely to be an important year where the COVID-19 crisis can be turned into an opportunity. If significant market share expansion domestically and internationally continues until the end of the year, a positive impact on valuation re-rating is expected."

Hana Financial Investment has given Orion a 'Buy' rating with a target price of 130,000 KRW. The closing price on the 23rd was 94,700 KRW.

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