[Click eStock] Nongshim, North America Sales Increase Expected... Low Price Buying Effective

[Asia Economy Reporter Hwang Yoon-joo] Hana Financial Investment maintained a 'Buy' rating and a target price of 500,000 KRW for Nongshim on the 10th, stating that concerns over performance deterioration are excessive.

Sim Eun-joo, a researcher at Hana Financial Investment, said, "Due to the sharp rise in wheat prices, investor sentiment has declined, causing the stock price to fall back to the bottom range," and added, "It is a valid time for low-price buying ahead of the Q1 earnings announcement."

Wheat prices surged 66% over the past two weeks due to Russia's invasion of Ukraine. Typically, flour milling companies hold about six months of inventory.

Researcher Sim stated, "If the current strong wheat trend continues, it is inevitable that the profitability of flour milling companies will deteriorate in Q4," and predicted, "Considering inventory levels and the last flour price adjustment by milling companies (July last year), discussions on price increases will likely begin no earlier than this fall."

Researcher Sim estimated this year's consolidated sales and operating profit at 2.8512 trillion KRW (YoY 7.1%) and 135 billion KRW (YoY 27.2%), respectively.

Sim explained, "Due to unprecedented inflation, ramen demand may actually increase," and added, "The ramen market share (by value) in Q4 last year was 58.1%, showing a continued upward trend, which is positive."

She also emphasized, "With significant ramen export growth (2021 YoY 22%) continuing, the separate corporation's export amount is expected to approach 300 billion KRW this year," and noted, "The U.S. subsidiary is experiencing volume growth alongside price increases."

She added, "At this point, before any price increase discussions have started among flour milling companies, concerns over ramen companies' performance deterioration seem somewhat excessive."

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