Nongshim headquarters. (Photo=Nongshim)

 

[Alpha Biz= Reporter Kim Minyoung] On the 27th, NH Investment & Securities projected that Nongshim's overseas subsidiaries would show significant growth and that export volumes would increase. Consequently, they raised the target price by 9% from 560,000 won to 610,000 won and maintained a 'buy' recommendation. The previous day's closing price for Nongshim was 493,000 won.

NH Investment & Securities estimated Nongshim's consolidated revenue for the second quarter to be 880.6 billion won, up 5% year-on-year, with an operating profit of 51.8 billion won, down 4% year-on-year. On a separate basis, domestic sales are expected to reach 628.9 billion won, a 6% increase year-on-year.

Despite the impact of some product price reductions, the demand for cost-effective ramen remains high, and export volumes, particularly to Europe, are increasing rapidly. NH Investment & Securities noted.

The sales of overseas subsidiaries are particularly expected to grow by 4% year-on-year to 251.7 billion won. The performance recovery is attributed to the alleviated base burden of U.S. results and changes in the distribution network in China.

NH Investment & Securities also highlighted that the growth rates of the American and Chinese subsidiaries, which had shown a decline in sales until the first quarter, are expected to recover by 4% and 7% respectively, showing a more improved trend in the second half.

The announcement on the 12th of this month about the establishment of a new logistics center to meet the increasing domestic and international demand for ramen is also seen as a positive factor from a long-term perspective.

While the burden of increased manufacturing costs is expected to persist through the second quarter of this year, it is anticipated to ease from the third quarter, potentially leading to an increase in operating profit.

 

 

[ⓒ AlphaBIZ. 무단전재-재배포 금지]