Hanwha Investment & Securities on the 30th said Samyang Foods is expected to return to stair-step earnings growth starting this year. It maintained a Buy rating and raised its target price by 6% to 1.9 million won. Samyang Foods' previous day's closing price was 1,216,000 won.
Hanwha Investment & Securities analyzed that the weakening of Samyang Foods' earnings momentum in the second half of last year was closer to a supply issue than a demand issue.
Han Yu-jung, an analyst at Hanwha Investment & Securities, said, "It took a year and six months to reach full operation at the Miryang Plant 1; full operation at Plant 2 took nine months, and the China plant is expected to reach full operation within six months."
In the fourth quarter of last year, Samyang Foods' sales on a consolidation basis were 637.6 billion won and operating profit was 138.9 billion won. They rose 33.2% and 58.5%, respectively, from a year earlier, and operating profit met the consensus. Sales at the U.S. subsidiary exceeded the previous estimate, and domestic sales also topped the previous estimate thanks to new product launches.
It said stair-step earnings growth is expected starting this year. First, it plans to expand placements in leading big-box retail channels in the United States and to broaden new channel placements in Canada and Latin America.
The analyst predicted, "With the ramp-up at Miryang Plant 2, extended production hours at existing plants, replacement of aging lines and introduction of automation equipment, and early operation of the China plant, record-high quarterly sales will continue to be renewed."