[Click eStock] "Samyang Foods, Weak Dollar Trend Negative for Earnings... Target Price Down 13%"

[Asia Economy Reporter Ji-hwan Park] Daishin Securities evaluated on the 26th that external environmental factors such as the weak dollar phenomenon in the first half of this year are likely to have a negative impact on Samyang Foods' performance. Although the investment opinion was maintained as 'Buy,' the target price was lowered by 13% from 160,000 KRW to 140,000 KRW.

Researcher Yoo-jeong Han of Daishin Securities forecasted that Samyang Foods' consolidated sales in the fourth quarter of last year would increase by 1% year-on-year to 153.1 billion KRW, while operating profit would decrease by 1% to 21 billion KRW.

Specifically, domestically, sales were estimated to have increased by 1% and exports by 5% compared to the same period last year due to the impact of the social distancing level upgrade at the end of November. Researcher Han explained, "Although the export amount to China decreased by 28% year-on-year as the accumulated inventory from the third quarter of last year was deferred to the fourth quarter, the export amount to North America increased by 65% year-on-year due to increased local demand in the U.S. and the expansion effect of distribution channels in Canada." It was also noted that export amounts to multiple countries, including Bangladesh, South Africa, Thailand, New Zealand, and the Netherlands, where quarterly export amounts per country were less than 5 million USD, significantly increased.

However, there was a disappointing point regarding the exchange rate. The export sales ratio of Samyang Foods is estimated to be 55% in 2020 and 57% in 2021. Researcher Han explained, "Reflecting the forecast of a strong Korean won in the first half of this year, the purchase prices of raw materials such as wheat and palm oil are expected to decline." However, she added, "Since exports to most countries are settled based on the dollar, the exchange rate outlook for the first half of the year is expected to negatively affect Samyang Foods' profits."