[Click eStock] "Orion, Continued Earnings Improvement Expected This Year"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating and a target price of 160,000 KRW for Orion on the 20th. This is based on the assessment that the momentum for earnings improvement is expected to strengthen as the rising cost ratio trend eases in four countries: China, Korea, Vietnam, and Russia.

Orion's combined sales in the four countries for the third quarter are analyzed to be 629.7 billion KRW, and operating profit 115.5 billion KRW, representing growth of 5% and 6% respectively compared to the same period last year. On a combined basis for the four countries, sales in September were 228 billion KRW and operating profit 46 billion KRW, growing 9% and 10% respectively over the same period. Kiwoom Securities analyst Sangjun Park stated, "Despite the impact of early shipments in August due to pie price increases, the sales in yuan terms for the China subsidiary in September increased by 6% compared to a year ago," adding, "The price increase effect also raised the operating profit margin by 3.4 percentage points year-on-year, which was a key factor exceeding market expectations."

Orion's consolidated sales for the fourth quarter are expected to reach 651.1 billion KRW with operating profit of 118.9 billion KRW, representing growth of 13% and 40% respectively compared to the same period last year. This is due to the continued sales volume growth centered on new product effects, along with positive effects expected from the timing difference of the Lunar New Year in the China and Vietnam subsidiaries. Additionally, sales recovery is anticipated in Vietnam due to the easing of regional lockdowns, and the price increase effects in the China and Russia subsidiaries are expected to be fully reflected.

The cumulative company sales for the second and third quarters this year increased by 17% compared to the same period in 2019, when there was no impact from COVID-19. For the China subsidiary, sales during the same period increased by 11% compared to 2019. Analyst Park said, "Unlike competitors, sales volume expansion has continued through new category expansions (mass-produced bread, jelly, convenient meal replacements) and flavor extensions," adding, "The company has defended against recent raw material cost increases through cost reduction and price hikes, and the operating profit margin has shown improvement since August."

He further added, "With sales volume growth and price increase effects reflected simultaneously, the company is expected to show relatively rapid profit improvement within the industry."

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