April 19, 2024

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[THE INVESTOR] Nongshim’s earnings will begin to show signs of recovery from the second quarter, said KB Investment and Securities on June 18, raising the target price to 400,000 won (US$362.48) from 370,000 won. 

Its revenue in the second quarter will rise 3.6 percent on-year to 555.4 billion won and operating profit by 29.9 percent to 23.7 billion won. It is less burdened as price discount for domestic instant noodle market shrinks and its Chinese operations are recovering from 3 billion won operating loss last year. The US branch continues to grow steadily following the manufacturing facilities expansion last year while burdens of promotion costs will alleviate, said analyst Park Ae-ran. 

In line with global price rise of raw wheat, the milling industry is on the brink of raising prices, and when the price of instant noodle does rise following that, the effect will be noticeable. As the home meal replacement market diversifies, growth of instant noodle is bound to be limited and competition for new products is persisting, but price competition at least is easing, said the analyst maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)