"With new plants churning out products, a KRW 1.9 million share price is well within reach"... This company has moved beyond a passing fad [Weekend Money]

Expansion in the U.S. core market, with growth extending to Mexico and China
New China plant to begin operations next year; Vietnam plant set for completion in 2029
KRW 1.9 million target price... 50% upside from current price

Samyang Foods' global growth momentum for Buldak Ramen shows little sign of slowing. Overseas sales continue to rise, driven by expanded access to mainstream distribution channels in the United States and steady demand in China. The company is also expanding its supply capacity by adding production bases in China and Vietnam. It is seen as making the leap beyond a popular product to become a food company with a global production and distribution network.

Hyundai Motor Securities maintained its "Buy" rating and target price of KRW 1.9 million for Samyang Foods. This represents upside potential of around 50% compared with the most recent closing price.

The main driver of the growth outlook is expansion in overseas markets. Hyundai Motor Securities noted that Buldak Ramen continues to gain access to mainstream sales channels in the United States. The analysis also found that growth is accelerating in Mexico and that demand remains solid in China.

The European market is going through a short-term adjustment period. Sales growth may slow somewhat in the second half of this year as the company reorganizes its distribution partners, but is expected to regain momentum once the process is complete.

Expansion of production capacity is also gathering pace. Samyang Foods is preparing to begin full-scale operations at its new plant in China in January 2027. The plant will have total production capacity of 1.13 billion units, about 40% more than the current level. It is expected to reach maximum capacity in the second half of the year.

Once local production begins in China, the company can shift to the local plant the volume currently produced at its domestic plants for export to China. The resulting capacity freed up in Korea is intended to be focused on markets with relatively higher selling prices, such as the United States and Europe. This structure allows the company to pursue both overseas demand growth and improved profitability.

The company is also establishing a medium- to long-term production base in Vietnam. On November 11, Samyang Foods announced plans to set up a local production subsidiary and invest in a factory in Vietnam. The investment will total KRW 218.6 billion, comprising KRW 131.1 billion in capital contributions to the subsidiary and KRW 87.5 billion expected to be raised through borrowing. The factory is targeted to begin operations in January 2029.

The Vietnam plant will be built to accommodate a total of eight production lines. The plan is to initially operate one line for dried noodles, then expand to six lines in the medium term and eight in the long term. Once all eight lines are operational, production capacity will increase by about 30% from the current level. The investment is aimed at meeting demand in Europe and Southeast Asia.

Earnings growth is also expected to continue. Hyundai Motor Securities estimates Samyang Foods' consolidated revenue for 2026 at KRW 3.0825 trillion and operating profit at KRW 732.5 billion, increases of 31.1% and 39.7%, respectively, from the previous year. For 2027, it forecast revenue of KRW 3.768 trillion and operating profit of KRW 873.1 billion, up 22.2% and 19.2%, respectively, year over year. The operating margin is expected to reach 23.2%.

However, short-term factors may weigh on profitability. A stronger won and rising costs for palm oil, packaging materials, and logistics could increase cost pressures. Hyundai Motor Securities expects the effects to be offset by cost controls and operating leverage resulting from higher sales volumes.

"Buldak Ramen's global popularity is moving beyond a passing trend, driving production capacity expansion and overseas sales growth," said Ha Heeji, an analyst at Hyundai Motor Securities. "With production bases in China and Vietnam set to come online one after another, attention is focused on how much more growth momentum Samyang Foods can secure in the global ramen market."

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