"It seems that they will conquer the world with just spicy chicken noodles." "Sam-Bidia form is insane."A post related to Samyang Foods on an online stock investment community
Samyang Foods, which has captured global taste with its spicy chicken noodles, is challenging the ‘imperial stock’ (over 1 million won per share) as its stock price exceeds 900,000 won. Investors express expectations by calling Samyang Foods ‘Sam-Bidia’ and ‘Noodle-Bidia’ as its stock price shows a steep upward trend. The resumption of short selling at the end of this month and competition in sales with Nongshim, which has released new products, are cited as variables affecting the stock price.
◇ Premium strategy through overseas… Production increase in the second half
On the 18th, Samyang Foods closed at 926,000 won on the KOSDAQ. The company's stock price rose 4.51% over the past month (from February 18 to March 18), significantly outpacing the KOSPI index's increase (0.07%) during the same period. Since the beginning of the year, the increase has reached 21.05%, well ahead of the KOSPI's increase (8.87%).
Analysts say that Samyang Foods' pricing differentiation strategy is taking effect. Samyang Foods has increased its export proportion to markets with a high average selling price, such as the United States and Europe. The price of a single pack of spicy chicken noodles at Walmart in the U.S. is $1.4 (approximately 2,033 won), which is 62.6% more expensive than the domestic price (1,250 won).
Son Hyeonjeong, a researcher at Yuanta Securities Korea, noted, "The average selling price of spicy chicken noodles is 30% higher than that of competing products," adding, "There is differentiated profitability through a premium pricing strategy." Son also mentioned, "Spicy chicken noodles are evolving into a mega brand that encompasses sauces, snacks, and convenient foods beyond just being a noodle brand."
Samyang Foods' operating profit surpassed Nongshim for the first time last year. Thanks to strong export of spicy chicken noodles, it achieved the highest performance since its establishment, widening its market capitalization gap from Nongshim to about three times. Securities firms' research centers predict that Samyang Foods' stock price will surpass 1 million won. Recently, Hana Securities, Yuanta Securities Korea, Kiwoom Securities, LS Securities, Hanwha Investment & Securities, and Korea Investment Securities have set their target stock prices for Samyang Foods at between 1.1 million and 1.2 million won.
There are prospects that Samyang Foods' second factory in Miryang, Gyeongnam, which is under construction, will accelerate exports once it begins operations in the second half of this year. As of the fourth quarter of last year, Samyang Foods' entry rate into U.S. distribution companies is over 90% at Walmart and about 50% at Costco. However, the production of spicy chicken noodles cannot keep up with the demand.
Park Seongho, a researcher at LS Securities, said, "Assuming the Miryang second factory can produce 700 million products annually, the export production capacity will rise by about 40% compared to the current level," adding, "Considering the current demand, we could reach maximum production capacity by the second half of next year."
◇ Must overcome short selling resumption and Nongshim's Shin Ramyeon Tumba
There are indeed risk factors concerning the stock price. The resumption of short selling scheduled for the end of this month could be a hindrance to Samyang Foods' stock price. The volume of short selling tends to increase around stocks that are highly valued after a rapid rise in stock prices.
Jeong Dawn, a researcher at LS Securities, pointed out that Samyang Foods is likely to be a target of short selling, stating, "Short selling will increase on stocks that have become expensive in a short time, and some of the index's rising trends may show signs of reversal."
Samyang Foods' stock price recorded a remarkable increase of 374% over the past year. According to the financial information company FnGuide, Samyang Foods' price-to-book ratio (PBR) is 12.08 times, significantly surpassing Nongshim (0.93 times) and OTOKI (0.7 times). Generally, a higher PBR indicates that a stock is overvalued.
Nongshim's aggressive marketing strategy, introducing new products, is also a variable. Nongshim's new product 'Shin Ramyeon Tumba' is set for global release in March. Additionally, last October, it increased production lines in the U.S. and recently established a subsidiary in Europe.
According to Euromonitor, in the previous year, the U.S. noodle market share was as follows: Toyo Suisan (43%), Nongshim (22%), Nissin (19%), and Samyang Foods (8%). Samyang Foods raised its market share by 3 percentage points in one year. As Nongshim engages in aggressive marketing out of concern for its market share, competition for market share will likely intensify.
Shim Eunju, a researcher at Hana Securities, said, "This year will be a landmark year for Nongshim's overseas sales increase (level-up)" and added, "The global launch of the new product Shin Ramyeon Tumba will accelerate in March, and with the main display effectiveness of Nongshim's North America subsidiary moving into Walmart, annual double-digit revenue growth is possible."