[Click eStock] "Orion, Comfortable Earnings Growth Flow Until Next Year"

[Asia Economy Reporter Park Jihwan] NH Investment & Securities forecasted on the 15th that Orion's previously sluggish Chinese subsidiary's performance recovery trend will continue through next year. They maintained a 'Buy' investment rating and a target price of 175,000 KRW.

Researcher Jomijin from NH Investment & Securities stated, "The combined operating profit of each subsidiary in August turned to an increase compared to the previous year," adding, "Due to cost reduction efforts, sales normalization, and the effect of price increases, a gradual improvement in profit spreads is expected from the second half of the year."

In particular, the recovery of the Chinese subsidiary's performance, which was a cause of the sluggishness in the first half, marks the beginning of a comfortable profit growth phase continuing through next year. Researcher Jomijin said, "the burden of rising manufacturing costs has been resolved monthly solely through cost reduction efforts," and "especially for the Chinese subsidiary, fixed cost burdens have been reduced due to workforce cuts following the indirect TT channel downsizing, and with sales normalization and price increases (6-10% in September) combined, a full-scale performance rebound is expected from the third quarter onward."

The Vietnam subsidiary is affected by the resurgence of COVID-19 but is evaluated to have better operating conditions compared to competitors through direct supply conversion and sales channel diversification. The Russian subsidiary is expected to improve performance through price increases across all products (7% increase from October) and product expansion.

The combined sales of each subsidiary in August are estimated at 209.8 billion KRW, up 4.3% year-on-year, and operating profit at 40.2 billion KRW, up 15.5%. The turnaround of the Chinese subsidiary is driving the overall performance improvement. Researcher Jo said, "The Chinese subsidiary's sales are expected to increase by 2.0% to 109.1 billion KRW, and operating profit by 31.2% to 26.9 billion KRW," adding, "With the peak season approaching, sales are expected to increase due to normalized shipments."

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