[THE INVESTOR] The rising number of single or double-person households and the effect of a price hike will bolster the steady growth for Ottogi, said Shinhan Financial Investment on Feb. 21, maintaining a “buy” recommendation and 900,000 won target price.
Its revenue this year will climb 1.3 percent to 2 trillion won and operating profit will rise 5.8 percent to 150.7 billion won, forecast analyst Hong Se-jong. “Sales of dried foodstuff and condiments will increase and in tandem with the growth of one or two-person households, the processed agricultural and marine products will hike seven to eight percent on-year.”
Following the market leader’s price hike in instant noodles and canned tuna, Ottogi will be able to raise the price of its products in these categories up to six percent, which will boost its operating profit, noted the analyst.
Propelled by the surge in sales of instant noodles and processed foods, the food company’s fourth-quarter income beat the market expectation and entered an upward cycle for the first time in five quarters, said Hong, adding that its market share in ramen reached 24 percent following the price raise of its rival Nongshim.
By Hwang You-mee (glamazon@heraldcorp.com)