[Click eStock] "Nongshim Hits Bottom in Q2... Rebound Expected in Second Half"

Yuanta Securities stated on July 22 that it is maintaining its "Buy" investment rating and a target price of 4.9 million KRW for Nongshim, noting, "We expect the company's performance to enter a normalization phase in the second half of the year, with the second quarter marking the bottom."

Son Hyunjung, a research analyst at Yuanta Securities, said on this day, "The 12-month forward price-to-earnings ratio (PER) is around 12 times. Considering the effects of price hikes both domestically and internationally, the stock's valuation remains attractive."

Regarding Nongshim's performance in the second quarter of this year, Son forecasted, "On a consolidated basis, sales will reach 900.4 billion KRW, up 4.6% year-on-year, and operating profit will rise 13.1% to 49.4 billion KRW, resulting in an operating margin of 5.5%." In Korea, improved profitability is expected as the impact of ramen price increases is reflected from the second quarter. However, overseas, profit contribution is likely to be limited due to increased marketing expenses aimed at expanding distribution of the new Tomba product.

For the North American subsidiary, Son analyzed that although the new Tomba product was test-launched at select Walmart stores in April and some Costco LA locations in May, its sales contribution remains limited. "Due to a slowdown in consumption and increased marketing expenses, operating profit is inevitably expected to decline," Son said. "However, with additional large channel entries scheduled for the second half of the year, the sales contribution should begin to appear with a time lag."

In China, after a sales gap caused by distribution restructuring in the first quarter, a clear recovery trend is expected compared to the previous quarter. In Japan, Tomba was launched in all Seven-Eleven stores from mid-April, and the initial stock sold out, indicating a positive consumer response. Son pointed out, "Both countries are entering a phase where the impact of the Tomba launch is becoming significant, demonstrating the potential for global expansion, particularly in Asia."

Additionally, Son commented, "Performance improvement will become more pronounced from the second half of the year. In particular, in Korea, the simultaneous effects of a recovery in consumer sentiment and the government's livelihood support payments (July-August) will enable the company to achieve leverage in both sales and profits."

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