[Click eStock] "Orion, Confirmed Upward Trend in Operating Performance"

Raw Material Costs Increased, but Dominant Market Power Expanded
Hi Investment & Securities "Orion Target Price Maintained at 170,000 Won"

[Asia Economy Reporter Gong Byung-sun] Orion showed favorable operating results in October this year despite external variables such as raw material cost burdens. Considering the resolution of the low base effect and the holiday effect from the 4th quarter, future operating results are expected to continue an upward trend.

According to Hi Investment & Securities on the 17th, Orion's sales in October this year reached 204.4 billion KRW, a 6.4% increase compared to the same period last year, and operating profit was 38 billion KRW, a 0.3% decrease. Excluding demand fluctuation effects caused by price increases before and after, Hi Investment & Securities analyzed that market dominance in all regions remains solid.

Sales in the Korean segment in October increased by 5.3% compared to the same period last year. Although raw material costs rose, increased operating rates led to efficiency and cost improvements. Additionally, while competitors bear burdens related to negative growth, Orion's market dominance expanded notably.

The China segment is expected to see growth in performance starting November. Shipment of Chinese Lunar New Year volumes begins in November. Accordingly, the stabilization of price increases for pies, holiday effects, and distribution network restructuring are expected to be reflected in the results. The Vietnam segment is also anticipated to show high growth from the 4th quarter. Both the flagship snack products and new products demonstrate strong competitiveness, and the potential for profit improvement due to the transition to direct delivery is positively evaluated.

The Russia segment is expected to show additional growth considering operating rates and shipment status. Due to a 7% price increase across all products starting from early last month caused by rising global raw material prices, some negative growth appeared due to early shipments in September, but the new product strategy is proving effective. Furthermore, the second plant, scheduled for completion next year, is expected to contribute to the expansion of Russia's operating results in the future.

Lee Kyung-shin, a researcher at Hi Investment & Securities, stated, “Considering the demand expansion that began in the second half of this year, the major hurdle of the low base effect has already been overcome, and the upward trend in operating results has been confirmed. The short-term excessive stock price decline due to weakening external variables can rather be seen as a buying opportunity when considering the possibility of further improvement in operating results in the second half of this year and next year.”

Accordingly, Hi Investment & Securities maintained Orion's investment opinion as ‘Buy’ and the target stock price at 170,000 KRW. The closing price on the previous day was 108,000 KRW.