[Click eStock] "Samyang Foods, Expecting Significant External Growth Next Year... Target Price Up"

Target Price Raised by 4% Compared to Previous Level

Daishin Securities raised the target price for Samyang Foods from 750,000 KRW to 780,000 KRW on the 15th, anticipating significant external growth next year. The investment rating was maintained as 'Buy.'

Jung Hansol, a researcher at Daishin Securities, stated, "Sales growth is being maintained by focusing on strategic countries such as China, the United States, and Europe, but until the Milyang Plant 2 begins operation next year, limited production capacity weakens the performance momentum, and the current stock price reflects this." He added, "Based on the experience of operating Plant 1, the initial operating rate of Milyang Plant 2 is expected to rise quickly, enabling significant external growth from the second half of next year." He further noted, "With the recent stock price adjustment, valuation pressure has also eased, so we maintain it as the top pick in the sector."

Samyang Foods recorded consolidated sales of 439 billion KRW in the third quarter of this year, a 31% increase compared to the same period last year, and operating profit of 87.3 billion KRW, up 101%, meeting consensus estimates (average securities firm forecasts). Researcher Jung analyzed, "Despite limited production capacity and unfavorable exchange rates, overseas noodle and snack sales increased by 42% year-on-year to 332.8 billion KRW by focusing on regions with high average selling prices (ASP)." He added, "China grew by 45% by concentrating on offline snack channels, and the U.S. increased by 97%, but growth was limited compared to the previous quarter as exports to Canada and Mexico were restricted to focus on U.S. demand due to volume shortages."

Operating profit margin improved by 6.9 percentage points year-on-year to 19.9% due to operating leverage effects. Jung said, "However, as additional plants were operated to expand supply volume, related costs increased, and logistics, advertising, and other expenses rose during overseas business expansion, resulting in a 1.2 percentage point decline compared to the previous quarter."

Europe is expected to become a new growth engine next year. With a significant increase in exports to Europe, the establishment of a Dutch subsidiary was completed in the third quarter. Researcher Lee said, "The Dutch subsidiary is expected to focus on securing entry channels within Europe until Plant 2 begins operation," and forecasted, "Europe will become a new growth engine for Samyang Foods in 2025."