[Click e-Stock] Smooth Sailing in China and Vietnam... Orion Also on the Rise

Stabilization of Raw Material Prices...
Reduced Promotional Expenses in China
Growth Momentum Expected to Strengthen Toward Year-End

There are expectations that Orion will achieve solid performance toward the end of the year. This outlook is supported by the stabilization of raw material prices and the growth of its Chinese subsidiary, which has increased optimism for future growth.

On September 18, Kiwoom Securities maintained its target price for Orion at 150,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 108,000 won.

Last month, Orion recorded a combined sales figure of 276.8 billion won and an operating profit of 48 billion won across four countries. Compared to the same period last year, sales increased by 4.4%, while operating profit decreased by 2.2%. However, this includes a one-off expense of 5 billion won related to the recall of Cham Bungeoppang by the Korean subsidiary. Excluding this, actual operating profit is estimated to have increased by approximately 8% year-on-year.

Although the overall sales growth rate was only about 4%, sales from the snack shop channel in China and the Russian subsidiary grew by 47% and 20.8% (based on Russian ruble), respectively, compared to the same period last year. This indicates that the high growth trend is continuing. The combined operating margin across the four countries, excluding one-off expenses, improved by 0.6 percentage points year-on-year to 19.1%. Despite ongoing pressure from rising raw material costs such as cocoa, profitability appears to have improved due to reduced promotional expenses at the Chinese subsidiary.

Orion has continued to increase promotional expenses at its Chinese and Vietnamese subsidiaries this year, despite the overall burden of rising costs. In China, the company increased the proportion of new products and expanded the sales share from growth channels such as snack shops. In Vietnam, it strengthened its market dominance in response to aggressive marketing by competitors.

Recently, cocoa prices have stabilized, so the company expects its overall cost ratio to stabilize from the first quarter of next year. The contribution to profits from new products and growth channels at the Chinese subsidiary, where investments have been concentrated this year, may also increase. In addition, sales growth momentum in the first quarter of next year could be further boosted by the late timing of the Lunar New Year.

Park Sangjun, a researcher at Kiwoom Securities, stated, "While the momentum for earnings improvement in the second half of this year is weak due to rising costs and increased promotional expenses, it is expected to strengthen from the first quarter of next year."

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