[Click eStock] "Orion, Stable Growth Trend... Price Increase Effect Expected from 4Q"

[Asia Economy Reporter Song Hwajeong] KB Securities evaluated Orion as maintaining stable growth despite the burden of rising raw material costs, and maintained a 'Buy' investment rating with a target price of 160,000 KRW on the 22nd.

KB Securities expects Orion's Q3 consolidated revenue to increase by 4.7% year-on-year to 625.6 billion KRW, and operating profit to rise by 6.9% to 115.3 billion KRW, in line with market consensus. Researcher Lee Seonhwa of KB Securities explained, "Although the burden of manufacturing costs increased due to rising grain prices, the Chinese subsidiary implemented price increases on the 6th of last month and continuously launched new products, successfully expanding the category and achieving qualitative growth."

Despite the challenging business environment, Orion succeeded in raising prices based on the market dominance of key products such as Choco Pie, and sales across all subsidiaries are expected to show growth in Q3. Lee said, "In the first half of this year, performance was somewhat sluggish due to the double burden of a high base and increased raw material costs, but after implementing price increases in Q3, sales growth and a significant expansion of margin spread are expected from Q4 and into 2022."

Orion's Chinese subsidiary raised prices in September, and the Russian subsidiary implemented a 7% price increase across all products earlier this month. Lee analyzed, "Grain prices are expected to stabilize by the end of the year, and from Q1 next year, margin spreads will expand, allowing the effects of price increases to fully materialize. Additionally, the India plant began operations in February this year, the US sales subsidiary was established in March, and the second Russian plant is scheduled for completion in May next year, so an increase in sales volume due to regional base expansion is also anticipated."