Shinhan Investment & Securities on the 19th maintained a buy rating and a target price of 160,000 won on Orion, saying steady sales growth is continuing across all global regions. The previous trading day's closing price was 136,200 won.
Cho Sang-hun, a researcher at Shinhan Investment & Securities, said, "Although the stock price weakened along with a slowdown in top-line growth over the past two years, this year sales growth and a rebound in the share price are expected, helped by a successful end to the peak season and strengthened product and channel competitiveness."
In particular, it noted that the cocoa price, which was above $10,000 per ton in the first half of last year, has fallen to around $3,200 this year. Cho said, "From the second quarter, the effect of easing cost burdens will be fully reflected, and margin spread improvement will appear."
By region, overall growth continued. In April, year-over-year sales growth rates by country were Korea 3.0%, China 22.9%, Vietnam 14.8%, and Russia 21.6%. However, due to differences in cost burdens and the impact of geopolitical risks, operating profit growth rates showed a differentiated trend by region: Korea -7.4%, China 16.8%, Vietnam 5.1%, and Russia 57.1%.
It analyzed that the expansion of high-growth channels stood out in the China business. Sales in yuan rose 12%, with snack shop sales up 43% and the e-commerce channel up 21%. It added that strategies such as channel-specific specialized products and limited seasonal product launches also contributed to improved results.
However, profitability partially weakened as promotion expenses increased amid aggressive channel expansion. Despite a drop in materials and supplies unit costs, China's operating margin fell 0.9 percentage point year over year to 17.1% due to spending such as channel incentives.
Cho said, "Even amid a consumption slump, it is worth noting that the company is actively expanding entries into high-growth channels and pursuing channel-specific specialized product strategies." He added, "Steady sales growth across all regions, yuan strength, and easing cost burdens are anticipated," and explained, "At 11 times the 12-month forward price-earnings ratio (PER), valuation appeal is high."
In addition, it cited new product launches, channel expansion, and overseas regional expansion as key variables for a future re-rating. He added, "If growth at the India and U.S. subsidiaries and expanded exports to Eastern Europe, the Middle East, and Africa become visible, entry into a premium valuation range is also possible."