Orion: Opportunity to Expand COVID-19 Market Share in China

[Asia Economy Reporter Park Jihwan] Meritz Securities on the 30th forecasted that the COVID-19 issue will act as an opportunity factor for Orion to expand its market share in the Chinese market, contrary to the THAAD situation. Accordingly, they presented a 'buy' investment opinion and raised the target price by 11.9% to 150,000 KRW.

Researcher Kim Jungwook of Meritz Securities analyzed, "Orion experienced a temporary decline in operating rate in February, but the operating rate recovered to 80-90% in March, meeting order demand," and added, "Operating profit margin (OPM) is expected to reach 30%."

In particular, competing potato chip brand Lay's suffered production setbacks, and brands such as Wangwang, Dali, and Tingyi have a high proportion of traditional store (TT) channels, which is considered a disadvantageous environment. Therefore, Orion's pie, biscuit, and snack products are emphasized as emerging substitutes in the Chinese food market.

Countries outside China, such as South Korea, Vietnam, and Russia, are sailing smoothly due to the effects of new products rather than external environmental changes. The domestic market is evaluated to be leading confectionery market sales growth with 20-30 aggressive new product launches annually since 2019. In Vietnam, rice crackers and mass-produced bread production volumes are fully sold out, and in Russia, the expansion effect of the Choco Pie lineup is positive.

Researcher Kim Jungwook said, "As the production and distribution disruptions of competitors due to the COVID-19 impact are expected to continue until the second quarter, it will be utilized as an opportunity to expand market share," and added, "The COVID-19 issue is creating a situation completely opposite to the past THAAD issue."

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