[Click eStock] "Orion, Impact of Raw Material Price Increase... Stabilization Expected in Second Half"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating and a target price of 150,000 KRW for Orion, expecting stock price stabilization in the second half of the year.

Orion's combined sales in February increased by 8% year-on-year to 163.7 billion KRW, and operating profit grew by 12% to 19.7 billion KRW. This solid performance exceeded concerns, with growth driven by regions excluding China. The year-on-year sales growth rates by corporation were Korea 9%, China 1%, Vietnam 20%, and Russia 32%. Eunjeong Park, a researcher at Yuanta Securities, stated, “Although there were impacts from rising manufacturing cost ratios, increased utility prices, and higher logistics costs company-wide, cost efficiency improvements accompanied these, resulting in an improved combined profit margin.” The year-on-year profit growth rates by corporation were Korea (-15%), China (56%), Vietnam (50%), and Russia (8%).

Orion is expected to face additional raw material price increases in the first half of the year due to geopolitical risks. In February, manufacturing cost ratios rose in all regions except China, but internal cost control is prioritized to defend profitability. Researcher Park explained, “Compared to competitors, Orion has been passive in raising prices, so there is room for price increases,” adding, “Additionally, from the end of February, China experienced further COVID-19 case increases leading to lockdowns in major areas, which will act as a variable on the demand side.”

Orion's consolidated sales for the first quarter are expected to reach 652.4 billion KRW, and operating profit 107.6 billion KRW, representing increases of 8% and 6% year-on-year, respectively. The impact of rising raw material prices is expected to affect profits and losses through the first half, but stock price stabilization is anticipated in the second half. Researcher Park said, “The stock price fell 18% over three months due to concerns about profit and loss burdens from external shocks,” and added, “These concerns are already reflected in the stock price, and profit momentum is expected to gradually improve in the second half.”

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