[Click eStock] "Orion, Focus on Second Half Earnings Momentum"

[Asia Economy Reporter Song Hwajeong] Daishin Securities maintained its 'Buy' rating and target price of 170,000 KRW for Orion on the 15th, expecting a recovery in performance starting from the second half of the year.

Han Yujeong, a researcher at Daishin Securities, said, "Although the first-quarter results this year fell short of expectations, local consumption in China is gradually recovering, and the category expansion effect, which began in earnest in March, is expected to become prominent from the second half of the year, leading us to revise upward our performance estimates for the second half."

Orion recorded first-quarter sales (simple sum by country) of 606.9 billion KRW, a 12% increase compared to the same period last year, and operating profit of 101.2 billion KRW, a 4% increase, both below market consensus. By country, sales in Korea increased by 4% to 198.8 billion KRW, and operating profit rose by 18% to 35.4 billion KRW. Researcher Han analyzed, "It appears that strong sales in the snack category and the contribution of strong sales from the newly expanded meal replacement category centered on the Dr. You brand played a significant role."

Sales in China increased by 15% to 302.1 billion KRW, while operating profit decreased by 2% to 46.5 billion KRW. Han said, "Despite the burden of the previous year's base, the growth trend continued, and considering the impact of a one-time gain of about 4 billion KRW reflected in the first quarter of last year, operating profit is also understood to have increased by 7% compared to the same period last year."

Additionally, Vietnam recorded sales of 82.9 billion KRW, up 18%, and operating profit of 15.7 billion KRW, down 1%. Russia's sales increased by 17% to 23.1 billion KRW, and operating profit remained at the same level as the previous year at 3.6 billion KRW. Vietnam's profitability was sluggish due to the retroactive reflection of wage increases, inventory depletion caused by logistics system changes, and strategic promotions conducted immediately after the peak season. In Russia, while external growth was prominent due to strong pie product sales, profitability was weak as the gross profit margin fell by 5 percentage points compared to the same period last year due to rising raw material prices.

The opinion is that attention should be paid to the recovery of performance in the second half rather than the sluggish first-quarter results. Researcher Han said, "The poor performance in March was a predictable situation, and the impact of poor performance is likely to continue until May," adding, "This poor performance seems to have been reflected in the stock price in advance, and attention should be paid to the performance momentum in the second half."

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