[Click e-Stock] "Nongshim: Short-Term Earnings Momentum Limited... Target Price Maintained at 540,000 Won"

On July 2, Hana Securities maintained its target price for Nongshim at 540,000 won, citing somewhat limited short-term earnings momentum.

According to Hana Securities, Nongshim’s consolidated revenue and operating profit for the second quarter are estimated at 932.4 billion won and 46.3 billion won, respectively. This represents increases of 7.4% and 15.2% year-on-year. During the same period, standalone revenue is expected to rise by 0.5% to 697.3 billion won, while standalone operating profit is projected to decrease by 9.1% to 28 billion won. Eunju Sim, Senior Researcher at Hana Securities, commented, “As the increase in raw material prices begins to be reflected, the consolidated profit and loss is likely to slightly fall short of market expectations.”

This year’s consolidated revenue and operating profit are estimated at 3.787 trillion won and 199.4 billion won, respectively, up 7.8% and 8.4% from the previous year. Sim explained, “Standalone profit and loss will likely remain at last year’s level or decrease slightly compared to last year, as price cuts for some products begin to take effect from the second quarter and raw material-driven cost pressures become more pronounced.”

She added, “The key driver for overall earnings improvement this year will be overseas performance. In North America, operating margin is expected to improve by around 2.0 percentage points year-on-year thanks to efficient advertising spending. In China, double-digit top-line growth and operating margin improvement are anticipated due to the base effect, aggressive entry into snack channels, and favorable exchange rates.”

Accordingly, Hana Securities maintained a Buy recommendation and a target price of 540,000 won for Nongshim. The previous day, Nongshim’s closing price was 341,000 won.

Sim also analyzed, “The current share price is trading at 1.1 times the 12-month forward price-to-book ratio (PBR). There is no valuation burden, but short-term earnings momentum remains somewhat limited.”

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