'Sweeter Than Choco Pie Dividends'... Why Yuanta Raised Orion's Target Price and Says "Buy Now" Despite KOSPI Volatility [Click e-Stock]

Yuanta Securities has raised its target price for Orion from 155,000 won to 172,000 won, while maintaining a Buy rating.

On July 22, Hyunjung Son, a researcher at Yuanta Securities, stated, "The impact of lower prices for key raw materials will be greater in the second half of this year, and fixed cost leverage due to increased sales in China and Russia will accelerate, leading to a higher profit growth rate." She added, "The current share price is trading at nine times the expected price-to-earnings ratio (PER) for next year, at a discount compared to global confectionery companies."

Son noted, "On July 6, the company announced its first-ever interim dividend since its founding, with a payout of 1,750 won per share," and said, "As the company plans to continue its dividend policy to meet the requirements for high-dividend companies, the outlook for dividend expansion has become more visible."

For the second quarter of this year, consolidated sales are expected to reach 896.1 billion won, up 15.3% year-on-year, while operating profit is projected to rise 10.8% to 134.6 billion won during the same period. These figures are in line with consensus estimates. Son explained, "Robust sales in China and Russia, along with favorable exchange rates, have driven top-line growth. However, the expansion costs for distribution channels in China and cost and promotion burdens in Vietnam are expected to limit profit margin improvement." She also noted, "In Korea, strong sales growth continued thanks to new products and the expansion of export sales."

Son assessed that Orion's sales in China are growing and that sales in Russia are driving profit growth. "While China's operating profit margin is expected to decline slightly due to incentives for channel expansion, snack shop and e-commerce-focused sales are continuing to grow. In Russia, strong sales of pies and jellies have pushed plant utilization above 100%, and profitability is expected to improve with expanded sourcing of local raw materials and falling prices for cocoa and shortening," she said.

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