KB Securities maintained Nongshim's investment opinion 'buy' and target stock price of 400,000 won. Nongshim's third-quarter earnings are expected to meet its market outlook (consensus).
It is seen as easing the burden of grain prices, which have increased the effect of raising the selling price of instant noodles in Korea.
On the 22nd, KB Securities estimated Nongshim's third-quarter sales at 665.3 billion won, up 2.1 percent from a year earlier, and operating profit at 24.7 billion won, down 15.9 percent over the same period.
This corresponds to the consensus of 664.9 billion won and 25.5 billion won, respectively. The rise in grain prices is expected to adversely affect earnings.
The price of grain such as alcohol and flour mixed with soju fell in the first quarter of last year, but has been on the rise since then. In addition, it is estimated that operating profit will decrease in the third quarter of this year due to high base burden.
However, due to the increase in the selling price of domestic ramen, it is believed that it did not lead to poor performance. As a result, sales in the domestic sector are expected to increase 0.6% year-on-year and sales in the Chinese sector are expected to increase 4.2% over the same period.
In addition, sales in North America, Japan and Australia are expected to grow 8.8%, 4.2% and 4.5%, respectively, year-on-year. From the fourth quarter of this year, the effect of price hikes will be reflected in earnest.
The operating profit ratio, which was 2.7% in the second quarter, is expected to reach 4.4% in the fourth quarter after recording 3.7% in the third quarter.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
