Korea Investment & Securities Co. said on the 8th that there is no change in the investment points regarding Samyang Foods' share price plunging more than 8% the previous day. It maintained a "Buy" rating and a target price of 2 million won. Samyang Foods' closing price the previous day was 1,158,000 won.
Kang Eun-ji, an analyst at Korea Investment & Securities Co., said, "Samyang Foods is maintaining the clearest overseas business growth and high profitability within the food and beverage sector," adding, "Despite the operation of the Milyang Plant 2, a shortage in supply of Buldak spicy ramyeon persists."
She added, "Although shares plunged on expanded volatility the previous day, there is no change in Samyang Foods' investment points," noting, "If the fourth-quarter earnings confirm solid growth at the U.S. subsidiary, the share price will rebound."
Kang cited the effect of price hikes at the U.S. subsidiary as an investment point. Kang said, "Samyang Foods implemented about a 10% price increase to offset the impact of U.S. tariffs," adding, "Distributors applied consumer price hikes higher than Samyang Foods' increases, yet Buldak spicy ramyeon sales volume rose in the fourth quarter from the previous quarter, indicating steady demand."
She also viewed the start of operations at Milyang Plant 2 and the scheduled expansion of the China plant as investment points. Samyang Foods began operating Milyang Plant 2 in July last year, boosting production capacity by 35.6%, and when the China plant starts early next year, capacity is projected to increase by an additional 43%. This is calculated based on two shifts operating 20 hours on weekdays, and overall capacity could increase further if additional shifts are implemented, Kang explained.
She said, "Output from the newly operating plants will drive consolidation earnings growth by contributing to increases in overseas sales in the U.S., Europe, and China, where profitability is high," estimating annual operating profit growth rates at 34.2% for this year and 33.2% for next year.