[Click eStock] "Nongshim Reflects Price Increase... Expecting Performance Improvement"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its buy rating and target price of 500,000 KRW for Nongshim on the 14th. This outlook is based on the expectation that earnings could significantly increase due to the effect of selling price hikes.

Nongshim's consolidated sales and operating profit for the fourth quarter are estimated to be 675.9 billion KRW and 30.6 billion KRW respectively, representing increases of 6.8% and 17.7% compared to the same period last year. Separate sales and operating profit are analyzed to be 537.7 billion KRW and 16.1 billion KRW respectively, up 4.1% and 47.5% year-on-year. This is due to the full reflection of the price hike effect, which is expected to lead to significant performance improvement in the domestic segment.

Total ramen sales domestically and overseas are expected to increase by 4.8% compared to a year ago. Domestically, a 4-5% top-line growth is anticipated, driven by normalization from last year's high base and the effect of price increases. The domestic ramen market share is estimated at 56.8%, with an increase of 0.3 percentage points.

Sim Eun-joo, a researcher at Hana Financial Investment, said, “The upward trend in market share is expected to continue,” and added, “Exports are also understood to be maintaining double-digit growth compared to a year ago.”

Snack sales are also expected to show net growth due to the easing of last year's high base and strong sales of new products (Shrimp Crackers Black). Combined sales of overseas subsidiaries are estimated to increase by 10% year-on-year. In particular, the U.S., including Canada, is expected to show solid growth despite last year's high base. The expansion of Nongshim's brand awareness in the U.S. is encouraging.

Strong performance is expected next year as well. Due to competitors' selling price increases, Nongshim is anticipated to continue stable business operations. The ramen market share next year is analyzed to increase by 0.3 percentage points to 56.5% compared to this year. Researcher Sim said, “Domestic profits will naturally adjust export selling prices at the end of the year following domestic ramen price hikes,” and added, “The U.S. subsidiary is also understood to be considering price increases.” She further noted, “The current stock price is at a 12-month forward PBR of 0.8 times, which is at the lower end of the historical band,” and added, “Considering the sharp performance improvement from the fourth quarter, an active buying strategy is valid.”

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