[Click eStock] "Orion, a Challenging Chinese Market"

China's Largest Festival, Lunar New Year, Positively Impacts Orion's Q4 Sales
Hana Financial Investment "Maintains Orion Target Price at 170,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Orion's fourth-quarter performance this year is expected to continue its upward trend. However, Hana Financial Investment predicts that it will face difficulties in the Chinese market next year.

On the 28th, Hana Financial Investment estimated Orion's fourth-quarter sales this year to be 641.1 billion KRW, an 11% increase compared to the same period last year, and operating profit to be 108.4 billion KRW, a 27.4% increase over the same period. These figures are 0.28% and 3.3% below the respective consensus estimates.

The Chinese Lunar New Year, the largest holiday in China, is expected to have a positive impact on performance. With next year's Lunar New Year volume expected to be concentrated this month, Hana Financial Investment estimated that Orion's Chinese subsidiary's fourth-quarter sales will increase by 10.1% compared to the same period last year. Additionally, the price increase of Choco Pie is also expected to contribute to improved performance.

Growth is also observed in other subsidiaries. Sales of new products such as Dr. You are performing well, and domestic subsidiaries' fourth-quarter sales are expected to grow by 5% compared to the same period last year. Sales of the Vietnam and Russia subsidiaries are also expected to increase by 17% and 40%, respectively, compared to the same period last year.

Shim Eun-joo, a researcher at Hana Financial Investment, explained, "In Vietnam, production and distribution are rapidly recovering as regional lockdown measures are eased," and "In Russia, the expansion of product sales categories was effective."

However, the Chinese market next year is expected to be challenging. There are concerns about a high base effect due to strong first-quarter results this year, and domestic consumption in China remains sluggish. Nevertheless, due to limited price increases on some products, Chinese sales next year are estimated to increase by 1.4% compared to this year.

Accordingly, Hana Financial Investment maintained its investment opinion of 'Buy' on Orion and set a target price of 170,000 KRW. The closing price on the previous day was 104,000 KRW.

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