[Click eStock] "Nongshim, Q3 Earnings Exceed Consensus"

Despite Raw Material and Logistics Cost Burdens... Impact of Ramen Price Increase Reflected
Kiwoom Securities "Maintains Nongshim Target Price at 410,000 Won"

On the 15th, ramen was displayed at a large supermarket in Seoul. With rising recognition through Korean dramas and movies, ramen is gaining global popularity. According to the industry, Nongshim's cumulative overseas sales of Shin Ramyun in the third quarter have surpassed domestic sales. Samyang Foods' overseas sales accounted for 57% of total sales last year. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Gong Byung-sun] Nongshim posted third-quarter earnings this year that exceeded market consensus. This is interpreted as a positive effect of ramen price increases and overseas expansion.

According to Kiwoom Securities on the 16th, Nongshim's third-quarter sales increased by 3.3% year-on-year to 673 billion KRW, and operating profit decreased by 0.7% to 29.1 billion KRW during the same period. These figures exceed the respective consensus by 1.5% and 25.3%.

The decline in operating profit is due to rising raw material costs and logistics expenses in the United States. With the supply chain crisis, the prices of raw materials such as flour and palm oil, as well as U.S. logistics costs, have all increased.

However, the effect of ramen price hikes appears to be gradually reflected. Last month, domestic ramen prices rose by 11% compared to a year ago, somewhat alleviating the burden of raw material and logistics costs. Park Sang-jun, a researcher at Kiwoom Securities, explained, “Major competitors are also affected by cost burdens,” adding, “The intensity of competition in the domestic market has stabilized.”

Performance in overseas markets also showed favorable results. In the U.S. and Canada, product supply was expanded mainly through local large distribution channels such as Costco. As a result, the U.S. and Canada grew by 15% and 11%, respectively. Additionally, the China segment grew by 15% due to expanded sales in large stores and e-commerce.

In the mid-to-long term, the growth of overseas markets centered on North America is expected to be a positive factor for performance. Nongshim is diversifying its product lineup in the U.S. market beyond Shin Ramyun to include Neoguri, Chapagetti, and Tonkotsu Ramen, and plans to open a second factory next year. Furthermore, if raw material costs continue to rise, Nongshim has the capacity to raise ramen prices in the North American market.

Accordingly, Kiwoom Securities maintained its investment opinion of “Buy” on Nongshim with a target price of 410,000 KRW. The closing price on the previous day was 283,500 KRW.

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