[Click eStock] "Novarex Posts Strong Results at Home and Abroad... Target Price Raised"

DS Investment & Securities Sets Novarex Target Price at 26,000 Won
"First Quarter Exceeds Consensus... Upward Revision of This Year's Sales Forecast"

On May 19, DS Investment & Securities raised its target price for Novarex to 26,000 won, up 13%, while maintaining its "buy" investment rating, citing the company's strong first-quarter performance this year. Novarex is a manufacturer developing and producing health functional foods on an ODM basis.

In the first quarter of this year, Novarex recorded sales of 120.8 billion won (up 33% year-on-year) and operating profit of 14.1 billion won (up 68%). Operating profit exceeded DS Investment & Securities' forecast of 11.4 billion won.

Both domestic and overseas sales showed strong growth. Domestic sales reached 77.3 billion won, a 30% increase year-on-year, marking the highest quarterly result. This appears to be the result of rising consumer interest in health and an expanded lineup of health functional foods at new distribution channels such as Olive Young and convenience stores, which led to increased order volumes from major clients.

Export sales amounted to 43.5 billion won, up 39% year-on-year. Sales to major clients in China, as well as exports to other Asian regions and beyond, also appear to have remained solid.

Sales to major clients recorded 32 billion won (up 33%), while other export sales stood at 11.4 billion won (up 55%), suggesting ongoing diversification of the client base. Overseas sales accounted for 36% of total sales in the first quarter.

DS Investment & Securities revised this year's outlook for Novarex upwards to sales of 481.6 billion won (up 19%), operating profit of 54.2 billion won (up 26%), and an operating profit margin (OPM) of 11.3%. Jang Jihae, a research analyst at DS Investment & Securities, commented, "Stronger-than-expected domestic volume growth was confirmed in the first quarter, and concerns about a slowdown in exports were shown to be merely a matter of timing. In addition, improved profitability resulting from eased fixed cost burdens due to top-line growth led to an upward revision of the profit margin outlook."

Novarex's plant utilization rate in the first quarter was 113%, and it has remained above 100% since the second half of last year. With the construction of a second factory in Osong and investments to improve the efficiency of the first factory's production line, the company's production capacity (CAPA) is expected to expand to between 800 billion and 1 trillion won by the end of 2027.

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