[Click eStock] Nongshim Lowers Margin Expectations "Target Price Downgraded"

[Asia Economy Reporter Lee Seon-ae] Hi Investment & Securities announced on the 17th that it maintains a buy rating on Nongshim but lowers the target price to 380,000 KRW. This is due to adjustments in operating performance estimates.

Lee Kyung-shin, a researcher at Hi Investment & Securities, stated, "The easing market competition for main products, along with selling and administrative expense efficiency, price increases, and new product launches?strategies leveraging Nongshim's market dominance for expansion?are effective compared to other competitors." However, he emphasized, "It is regrettable that despite above-expected growth in scale due to the sharp rise in raw material costs, we need to lower our margin expectations somewhat."

He added, "If additional price pass-through power for future cost increases is demonstrated, market dominance based on product loyalty strengthened compared to pre-COVID-19 levels after volume resistance could lead to profit improvements beyond expectations," and "There is also potential for an upward stock price movement aligned with trends showing additional growth overseas."

Meanwhile, Nongshim recorded consolidated sales and operating profit of 736.3 billion KRW (16.1% increase) and 34.3 billion KRW (21.2% increase), respectively, in the first quarter. Price increases for domestic ramen and snacks have been meaningfully reflected in operating results, and high growth in scale was recorded due to some effects of the Omicron spread. However, operating profit met market expectations due to cost burdens.

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