[Click e-Stock] "Orion Target Price Raised...Simultaneous Improvement in Dividends and Earnings Expected"

On February 12, Yuanta Securities raised its target price for Orion to 155,000 won per share, saying that the company's dividend policy has been strengthened and that its earnings are also expected to improve this year.

In a report released that day titled "Confirming Strength Despite Cost Burden + Dividend Surprise," Yuanta Securities researcher Son Hyunjeong reviewed Orion's fourth-quarter results for last year and made this assessment.

Researcher Son said, "If 2025 was a period for spending on costs and preparing for capacity expansion, then 2026 will be a year in which the company enters a phase of profit leverage driven by cost stabilization and volume growth," adding, "On top of this, the strengthened shareholder return policy is creating a structure in which both earnings and dividends improve simultaneously." The newly presented target price of 155,000 won is based on applying a target price-to-earnings ratio (PER) of 13 times to this year's earnings per share (EPS) forecast. The previous target price was 149,000 won.

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In the fourth quarter of last year, Orion's consolidated revenue was 924.6 billion won and operating profit was 167.6 billion won, in line with the market consensus. This represents increases of 7.3% and 4.9%, respectively, compared with a year earlier. Son noted, "On an annual basis, the increase in operating profit was limited to 2.7% as the impact of rising costs and higher promotional expenses accumulated," but also emphasized, "The most meaningful change in these results is the strengthening of the dividend policy."

She said, "The dividend per share (DPS) for 2025 is 3,500 won, up 40% from the previous year, and the payout ratio has risen to 36%. Considering the net cash of 1.3 trillion won and the debt-free financial structure, there is ample room to increase dividends," adding, "The company will take into account the requirements for high-dividend companies through 2028." This is interpreted not as a short-term event, but as a structural change in the shareholder return policy. She went on to say, "Given the company's cash-generating ability and financial structure, there remains room to further raise the dividend payout ratio over the medium to long term."

On the business side, the analysis found that there were only limited signs of a slowdown in demand. Son explained, "In China, shipment volume in local currency terms remained at the previous year's level, while in Russia it continued to grow by more than 20% in local currency terms. Vietnam also saw shipments rebound by double digits in the latter part of the fourth quarter." She also projected that once the new plant is completed in 2027, production capacity will expand to about 750 billion won per year, laying the foundation for medium- to long-term scaling up of the company's top line.

Accordingly, she estimated that this year's consolidated revenue will reach 3.6078 trillion won and operating profit 629.4 billion won, up 8.3% and 12.7%, respectively, from a year earlier. Son said, "The impact of the decline in cocoa prices will begin to be reflected from the end of the first quarter, leading to some improvement in the annual manufacturing cost ratio," and presented an operating profit margin (OPM) forecast of 17.4%.

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