Hanwha Investment & Securities predicted that Nongshim will inevitably suffer from poor performance in the short term. However, earnings momentum is expected to recover in the second half of the year. The investment opinion 'Buy' and the target price was 360,000.
"Nongshim's short-term performance is bound to show a sluggish trend due to the base burden for the surge in demand caused by the COVID-19 last year and rising cost burden," Hanwha Investment & Securities said.
Nongshim's consolidated sales in the first quarter of this year fell 7.7 percent on-year to 634.4 billion won. Operating profit and controlling shareholders'net profit fell 55.5% and 40.5%, respectively, to 28.3 billion won and 29 billion won. This is because COVID-19 specials lead to base burdens.
Performance in the overseas sector was mixed among countries. Sales of new U.S. and Canadian subsidiaries grew only slightly due to the burden of COVID-19 and falling exchange rates. In China, sales of large channels were sluggish due to a drop in sales, while Japan showed good growth due to the expansion of its brand lineup of Shin Ramyun.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
