[Click e-Stock] "Nongshim Expected to See Overseas Subsidiary Sales Growth... Target Price Up"

On June 11, Hyundai Motor Securities reported that the contribution of overseas subsidiaries to Nongshim's performance is rising, and accordingly raised its target price from 5.4 million won to 5.5 million won. The investment rating of "Buy" was maintained.

Heeji Ha, a researcher at Hyundai Motor Securities, explained, "While a rebound in sales at the U.S. subsidiary still seems to be the most significant momentum for share price appreciation, the contribution from regions outside the United States continues to increase. Additionally, expectations remain high for an expanded contribution from Europe following the commencement of operations at the Noksan export plant in the fourth quarter of this year."

In the first quarter of this year, Nongshim recorded sales of 934 billion won, up 4.6% year-on-year, and operating profit of 67.4 billion won, an increase of 20.3%. Ha noted, "Domestic sales rose by 3.1%, and operating profit increased by 24.4%. Despite higher marketing expenses, the expansion of new product lines and growth in exports contributed to improved results." She added, "Overseas, sales grew by 23.1% and operating profit surged by 53.0%. Although U.S. sales volumes remained sluggish, growth centered on mainstream Shin Ramyun products continued, and profitability markedly improved, with visible margin gains driven by price increases and reduced marketing spending." In addition, she pointed out that in China, the expansion into new distribution channels and increased production of new products helped alleviate fixed costs and boost performance contribution, while in Europe, the distribution of Shin Ramyun Toowoomba through key channels was accelerating.

Hyundai Motor Securities forecasts Nongshim's second-quarter results at 915.7 billion won in sales, up 5.5% year-on-year, and 47.7 billion won in operating profit, up 18.8%. In Korea, sales are expected to fall by 0.2%, but operating profit is projected to rise by 10.1%. Ha said, "Domestic sales are likely to be defended by new product launches, but exports are expected to see negative growth due to the removal of consolidation adjustments following the establishment of the European subsidiary." She added, "From March, the effect of price hikes will diminish, and rising costs of oil and raw materials will further limit profit growth."

For overseas operations, sales and operating profit are expected to increase by 21.9% and 21.3%, respectively. Ha explained, "U.S. sales volume appears to be showing a slight improvement compared to the previous quarter, and in China, growth is anticipated to be led by snack shop channels." She also noted, "In Europe, Shin Ramyun Toowoomba is expanding into more countries, and the Russian subsidiary is preparing to begin operations in June."

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