Hyundai Motor Securities on the 14th said growth is expected in the second quarter for Samyang Foods through expanded marketing in the United States, and added that exports to China are also likely to show a visible recovery starting in March. It maintained a "Buy" investment rating and a target price of 1.8 million won. Samyang Foods' previous closing price was 1.29 million won.
Hyundai Motor Securities projected Samyang Foods' first-quarter revenue on a consolidation basis at 683.3 billion won, up 29.2% from a year earlier, and operating profit at 162.3 billion won, up 21.1%, and said the results should be in line with market consensus (average forecast).
By entity, U.S. revenue was expected to rise 37% from a year earlier and 4% from the previous quarter.
Ha Hee-ji, an analyst at Hyundai Motor Securities, said, "Quarter-over-quarter growth will slow because inventory is short relative to U.S. demand in the first quarter," but added, "As export data to the United States recovers in the first quarter, inventory building and full-fledged marketing at events such as Coachella and the World Cup are expected, so we expect U.S. revenue to rise in the second quarter."
Revenue in China was forecast to increase 25% from a year earlier and 3% from the prior quarter. In China, inventory was drawn down through the first quarter, but solid sell-through during Lunar New Year helped, and export data to China has been on a recovery track since March, the report said. Europe revenue was expected to rise 137% year over year and 4% quarter over quarter.
Ha said, "First-quarter profit is expected to meet market expectations," adding, "This quarter's advertising and promotion expenses are in the 16 billion to 17 billion won range, down from the fourth quarter, and profitability is expected to improve as materials and supplies prices fall."
The impact on freight costs from higher oil prices this quarter was also expected to be limited. Packaging materials were likewise expected to have little impact through the first half.
Ha explained, "From the second quarter, growth is expected through U.S. inventory recovery and full-fledged marketing expansion, and China is also seeing a visible recovery in exports starting in March," adding, "The company still has the clearest overseas growth momentum within the food and beverage sector."