[Click eStock] "Samyang Foods, Continued Earnings Growth Trend... Stock Undervalued"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating and target price of 130,000 KRW for Samyang Foods on the 16th.

Yujeong Han, a researcher at Daishin Securities, explained, "Buldak Bokkeum Myun is establishing a unique position by pioneering a niche market in the overseas food market. With the overseas subsidiaries starting full-scale business activities in the first quarter and the newly completed Miryang factory in the second quarter, sales capabilities and production efficiency are expected to improve, leading to continued structural improvements."

In the second quarter, Samyang Foods reported consolidated sales of 196.2 billion KRW and operating profit of 22 billion KRW, down 33% and 55% respectively from the previous year. These figures far exceeded the market's expected operating profit of 18.9 billion KRW.

Domestic sales are expected to grow 9% year-on-year to 66.5 billion KRW. Overseas sales are predicted to increase by 49% year-on-year, resulting in a 31% growth during the same period.

By region, exports to China and the Americas are expected to grow 46% and 68% respectively compared to the same period last year. Exports to other countries such as Indonesia and Thailand are also expected to grow 58% year-on-year, indicating balanced high growth across regions.

The main assumptions for profit estimates are a 30% increase in wheat flour input prices, a 50% increase in oil input prices, and a 10% increase in various raw material costs. Researcher Han said, "Considering the recent inflation situation and taking a conservative approach, the consolidated operating profit margin is estimated to improve by 2 percentage points year-on-year to 11.2%."

Although the stock price has been adjusted due to cost burdens from soaring grain prices, it is expected to show an upward trend going forward. Researcher Han stated, "With overwhelming export growth, profitability is improving compared to the previous year, and a meaningful earnings growth trend will continue within the food sector of the same industry."

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