Nongshim's Q2 Performance Depends on Success of New Products

[Asia Economy Reporter Minji Lee] Nongshim is expected to deliver strong performance with high sales growth in the first quarter, while the success of new products in the second quarter is likely to play a crucial role. Accordingly, Meritz Securities maintained a buy rating on Nongshim and set a target price of 370,000 KRW on the 2nd.

According to Meritz Securities on the 2nd, operating profit in the first quarter is estimated to have reached 43 billion KRW, a 37% increase compared to the same period last year. Sales are believed to have grown by about 8% to 637 billion KRW.

Jungwook Kim, a researcher at Meritz Securities, explained, “Since the outbreak of COVID-19, ramen sales have benefited the most with increases of 3% in January, 15% in February, and 3-5% in March,” adding, “The effect of broadcast media appears to have led to increased sales of key products, forming a virtuous cycle.”

As the second quarter is the season for bibimmyun, attention is expected to focus on the success of new products. With Samyang Foods and Ottogi expected to launch new products in the bibimmyun market, competition is likely to intensify further.

For stock price growth, the success of new products generating monthly sales exceeding 10 billion KRW is considered important. Researcher Jungwook Kim said, “Shin Ramyun Geonmyeon recorded monthly sales of 3 to 4 billion KRW and performed well, but the growth of mega brands remains uncertain,” adding, “Considering past stock price rises after breaking long-term box ranges, a product exceeding monthly sales of 15 billion KRW, similar to past Jjawang or Matjjamppong levels, is needed at the early stage of Neoguri RTA launch.”

He continued, “To overcome sales growth and intensified competition and improve profitability, launching a major new product and confirming monthly sales in the 10 billion KRW range is necessary,” he emphasized.

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