[Click eStock] "Orion, Strong Q1 Performance... Expansion of Market Share in China"

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating on Orion on the 4th, expecting first-quarter earnings to exceed market expectations, and set a target price of 140,000 KRW.

Orion's first-quarter consolidated operating profit is expected to reach 85.4 billion KRW, a 10% increase compared to the same period last year, surpassing market expectations. Sangjun Park, a researcher at Kiwoom Securities, said, "Due to the spread of COVID-19, snack consumption at home increased, resulting in better-than-expected demand for snacks in Korea and China," adding, "Major competitors' production facilities are concentrated in Wuhan, which led to a rise in market share in retail channels."

In Korea, sales are expected to increase by 6% year-on-year, driven by strong sales of Chalc Choco Pie and protein bars. Despite differences in the timing of the Lunar New Year, China is estimated to grow by 8% during the same period due to increased demand for snacks, rising market share in the snack and pie segments, and expanded sales of seaweed snacks. Vietnam is expected to see a 22% increase in sales due to strong rice snack sales. Russia is estimated to experience a 31% increase in sales, driven by strong Choco Pie sales.

Increased snack consumption at home due to reduced outdoor activities led to higher demand for snacks in Korea and China in the first quarter. The company plans to launch new products, including Chalc Choco Pie and snack extensions, starting in the second quarter to increase market share in China.

Researcher Park explained, "By normalizing production and sales faster than competitors, market share in the Chinese confectionery market rose in the first quarter," adding, "Since market share at the point of display tends to become fixed once it changes, the sales growth rate of the Chinese subsidiary in the second quarter is expected to be relatively steady."

He added, "However, since other competitors are also normalizing production and sales, we need to observe to what extent the increased market share will be maintained in the second quarter."

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