Kiwoom Securities on the 30th said Samyang Foods' operating margin improved on the back of price hikes at its U.S. subsidiary and stronger local currencies. It maintained a "buy (BUY)" rating and a target price of 18.5 million won. Samyang Foods' previous trading day closing price was 1.216 million won.
Samyang Foods said its fourth-quarter operating profit on a consolidation basis was 139 billion won, up 59% from a year earlier. That was in line with market expectations. The operating margin for the same period rose 1.1 percentage points (p) from a year earlier.
Park Sang-jun, a Kiwoom Securities researcher, said, "Despite slower sales growth due to timing differences in China's Lunar New Year and year-end marketing expense execution, the company's overall operating margin improved quarter over quarter thanks to price hikes at the U.S. subsidiary and the strength of major currencies such as the dollar, yuan, and euro."
Kiwoom Securities projected that first-quarter revenue and operating profit on a consolidation basis will rebound quarter over quarter to 680 billion won and 168.6 billion won, respectively. Those figures are up 29% and 26%, respectively, from a year earlier.
Park said, "Profitability is expected to improve on better regional mix from reflecting China's Lunar New Year sales volumes and increased exports to the United States and Europe, along with stabilization of marketing expenses."
In particular, ramen export value is expected to rebound with February as the trough. Park said, "Global demand for Buldak spicy ramyeon continues to grow, and demand could expand in the second quarter with China's '6·18' shopping event," adding, "There is also a possibility of three-shift production to increase supply volumes, so with February, which has fewer business days, as the trough, ramen export value will show a gradual recovery."