Stocks Linked to This Food Are More Attractive Than Japanese Firms [Weekend Money]

DS Investment & Securities Recommends Ramyeon Stocks
"Valuations Considered Highly Attractive"

There are opinions suggesting that stocks related to Korean instant noodle (ramyeon) companies merit attention, as their performance is showing strength primarily in overseas markets.

Jang Jihye, a researcher at DS Investment & Securities, stated this in her recent report titled "K-Ramyeon Is Back." Reviewing the second-quarter performance of domestic ramyeon companies, all firms met or slightly exceeded market expectations. Samyang Foods posted consolidated sales of KRW 770.3 billion and operating profit of KRW 176.2 billion, which is in line with the market's operating profit expectation of KRW 177.3 billion. Nongshim recorded KRW 956.1 billion in sales and KRW 59.3 billion in operating profit, surpassing the market expectation of KRW 51.3 billion.

This strong performance stems from the overseas sector. Overseas sales for Samyang Foods and Nongshim reached KRW 654.8 billion and KRW 328.6 billion, respectively, marking a 47% and 31% increase compared to the same period last year. Jang explained, "Common growth factors include mainstream-driven sales growth in the United States, coverage expansion in Europe, and snack shop-driven growth in China."

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As global demand for instant noodles remains robust, the market share of Korean ramyeon is rising. The total global demand for instant noodles reached 124.2 billion servings last year, with a compound annual growth rate (CAGR) of 1.3%. Among these, the United States—a key strategic market for many Korean ramyeon companies—ranked as the sixth-largest market globally, recording total demand of 5.2 billion servings. Growth in the premium ramyeon and stir-fried noodle (bokkeummyeon) categories, led by Korean companies, is driving overall market expansion. In fact, Korean ramyeon companies are demonstrating more prominent performance growth in the U.S. compared to leading Japanese noodle manufacturers.

To meet this rising demand, ramyeon companies are actively investing. In terms of capital investment, Samyang Foods is expanding its facilities in China, Nongshim is adding capacity at its Noksan plant in Korea, and Ottogi plans to construct a new export-oriented factory in Gumi. They are also expanding their coverage by country. Notably, they have recently begun establishing overseas sales subsidiaries in major countries in South America and Europe.

Jang assessed the current valuations of Samyang Foods and Nongshim as highly attractive. The price-to-earnings ratios (PER) of the two companies, based on their projected 2027 earnings, are 14 times and 12 times, respectively. In comparison, their Japanese counterparts, Toyo Suisan and Nissin, are trading at 15 times and 17 times earnings, respectively. Given that the overseas sales growth rate this year is around 15%, the relative attractiveness of the Korean companies is considered higher. She added, "We are maintaining our target share prices for Samyang Foods and Nongshim at KRW 1.9 million and KRW 550,000, respectively, and we designate Samyang Foods as our top pick in the sector."

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