Next Year Will Be a Year of Performance Turnaround for Ramen Companies... Focus on Nongshim, Samyang Foods, and Others

[Asia Economy Reporter Lee Seon-ae] NH Investment & Securities expects the performance of ramen companies to turn around in 2022.

On the 26th, Jomijin, a researcher at NH Investment & Securities, said, "In the domestic market, the effect of price increases will become full-scale, and overseas, growth momentum will be re-emphasized as distribution network expansion and product differentiation have been carried out to penetrate the market," adding, "We maintain a positive investment opinion on ramen companies and recommend Nongshim and Samyang Foods as related stocks."

Domestic ramen companies had a difficult year in 2021 due to the burden of the previous year's low base and pressure from rising raw material costs. However, most succeeded in raising sales prices, and since the fourth quarter, domestic corporate profitability has been improving. In 2022, a full-scale expansion of profit leverage is expected due to the decline in international grain prices. In addition, production capacity is being expanded to respond to increasing overseas demand, so overseas momentum is also expected to be re-emphasized.

In the case of Nongshim, three production lines for fried noodles (bagged and cup) will be additionally installed at the local ramen factory in the United States in early 2022. As a result, the combined production capacity of the North American corporation in the US and Canada is expected to expand by more than 40% from the existing maximum of about 450 billion KRW. Samyang Foods plans to start full-scale production from the second quarter after the completion of the Miryang factory in the first quarter of 2022. This is expected to increase the maximum annual ramen production volume by about 50% compared to the existing volume. From the fourth quarter, logistics congestion issues are gradually easing, and with the added effect of price increases overseas, export growth momentum is expected to be re-emphasized.