Orion's stock, which had been sluggish over the past year, has begun to rebound. With stable sales overseas and plans to expand production lines, mid- to long-term performance improvement is expected. Positive factors such as the end of the Russia-Ukraine war are also anticipated, which could accelerate the stock price recovery. As a result, securities firms are continuously raising their target prices.

Recovery Trend in Overseas Subsidiaries in China and Vietnam
Stock Price Up 14% in 3 Months... New 52-Week High Achieved

Raw Material Supply Normalization Expected if Russia-Ukraine War Ends
Mid-to-Long-Term Growth and Profitability Improvement Anticipated

Securities Firms Say "Stock Undervalued"... Target Prices Revised Upward

According to the Korea Exchange on the 26th, Orion's stock price has jumped 14% over the past three months. The closing price, which was 105,300 won on December 24 last year, rose to 119,600 won on the 24th of this month. On the 19th, it even reached 123,500 won during trading hours, marking a new 52-week high. After fluctuating until last month, the stock has entered a full-fledged upward phase this month with a significant increase. Compared to a year ago (90,500 won on March 25 last year), it is up 32%.

The recent rebound in stock price is largely driven by the recovery of overseas subsidiaries. In particular, Orion's Chinese subsidiary, which had seen stagnant growth in recent years, has improved sales thanks to new business strategies. Since last year, Orion has expanded its "snack shop" business along with online sales in China, and the recent economic downturn in China has accelerated the growth of snack shops. Snack shops are value-for-money stores where customers can buy a variety of products such as snacks, jerky, and instant milk tea in small quantities. The switch from direct sales by sales staff to indirect sales through local wholesale businesses last year also proved significant. Orion's Chinese subsidiary recorded sales of 79.9 billion won and operating profit of 11.3 billion won last month, up 42.2% and 189.7% year-on-year, respectively.

The Vietnam subsidiary also posted stable results last month, with sales and operating profit up 4% and 4.4% year-on-year, respectively. In Russia, sales increased by 18.4% over the same period. Orion's overseas market share is relatively high at over 60%. Based on last year's results, Orion's sales breakdown by region is Korea 35.4%, China 40.9%, Vietnam 16.5%, and Russia 7.4%. Strong performance from overseas subsidiaries naturally boosts overall results.

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The outlook remains positive. In Vietnam, the effects of aggressive production line expansions are expected to become apparent within the year. Son Hyunjung, a researcher at Yuanta Securities, said, "The Vietnam subsidiary added five lines at the Ho Chi Minh Miphuc plant and nine lines at the Hanoi Yenphong plant to meet rising demand for Choco Pie, potato snacks, and rice snacks," adding, "By the end of next year, the annual production capacity (CAPA) of the Vietnam subsidiary is expected to increase by more than 30% to about 850 billion won."

In Russia, which accounts for 40% (about 1.6 billion units) of global Choco Pie sales and is known as the 'Choco Pie Powerhouse,' measures are also being taken to meet demand. Orion is expanding its Choco Pie production lines by 30% and is considering establishing a new third plant. The effects of this expansion are expected to be reflected in performance starting at the end of this year, once the expansion is completed.

The potential end of the Russia-Ukraine war is also a key point to watch. Orion is considered a 'beneficiary stock' as mid- to long-term growth and profitability improvements are expected if the war ends. Park Sangjun, a researcher at Kiwoom Securities, said, "If the war ends, the appreciation of the ruble and economic recovery could be strengthened, and the burden of rising cocoa prices could be passed on through price increases," adding, "If raw material supply channels in Europe normalize and import unit prices decrease, sales growth and structural improvement in cost ratios will follow." Son also analyzed, "After the war ends, consumer sentiment recovery and increased disposable income in Russia are expected, which will accelerate sales growth for the Russian subsidiary as demand for snack products rises."

As a result, this year's performance is also expected to show an upward curve. IBK Investment & Securities forecasts Orion's consolidated sales this year to increase by 7.9% year-on-year to 3.3506 trillion won, with operating profit rising 8.2% to 588.1 billion won. Yuanta Securities also predicts sales and operating profit will climb 6.5% and 7.3%, respectively, during the same period.

Securities firms are maintaining a 'buy' recommendation for Orion and raising their target prices. Kiwoom Securities recently raised its target from 142,000 won to 150,000 won, and Korea Investment & Securities also increased its target from 130,000 won to 150,000 won. In addition, Kyobo Securities and Daishin Securities raised their targets to 145,000 won and 140,000 won, respectively. iM Securities maintains the highest target at 160,000 won. According to FnGuide, the consensus target price for Orion is 144,714 won, suggesting an upside potential of 21%.

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Valuation is also an attractive factor for investors. Considering future earnings growth, Orion's current stock price is seen as undervalued. Cho Sanghoon, a research fellow at Shinhan Investment & Securities, said, "The expected price-earnings ratio (PER) for this year is 10.4 times, indicating a phase of excessive undervaluation," adding, "If market share rises due to new product launches and channel expansion, and as category expansion (nut bars, jerky, etc.) and regional expansion become visible, Orion can enter a premium valuation range." Kim Taehyun, a researcher at IBK Investment & Securities, also said, "The current stock price is at a projected PER of 9.4 times for this year, which is lower than the industry average (10.7 times)," adding, "With growth expectations still valid, the stock price recovery is expected to continue."