[Asia Economy Reporter Jang Hyowon] Ebest Investment & Securities has diagnosed that the price increase effect for Nongshim will begin to be gradually reflected from the fourth quarter of this year and will become fully apparent from next year. Accordingly, the target stock price was raised by 21% from the previous to 400,000 KRW.
Researcher Shim Jihyun of Ebest Investment & Securities stated, “Nongshim's consolidated sales for the third quarter are expected to be 681.8 billion KRW, and operating profit 26.3 billion KRW, representing a 4.7% increase and a 10% decrease respectively compared to the same period last year,” adding, “We reflected the price increase momentum in the second half estimates and raised the earnings forecast.”
Researcher Shim analyzed, “In the case of ramen, since the intensity of price competition is relatively stronger compared to other food and beverage products, market share fluctuated depending on each company's decision during previous price increase periods, but this time, since all ramen companies raised prices overall, there will likely be no significant market share changes.”
He explained, “In the future, market share can be expanded through existing brand extensions in the new product market,” and added, “Regarding second half earnings, there will be no major changes from the existing guidance, but due to the shortened business days from the Chuseok holiday in September, some effects are expected to be deferred to the fourth quarter.”
Furthermore, he analyzed, “In overseas markets, the domestic economy in China was temporarily weak in the second quarter, resulting in a 24% decrease in scale, and this impact will partially continue until the third quarter,” and “In the U.S., significant progress has been made in strengthening the localized product portfolio, and effects from entering mainstream distribution channels are appearing.”
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