[Click eStock] "Orion, Excessive Stock Price Reflecting External Variable Concerns... Now Is a Buying Opportunity"

[Asia Economy Reporter Kwon Jaehee] Hi Investment & Securities maintained its 'Buy' rating and target price of 155,000 KRW for Orion on the 18th.

The combined operating performance growth rate of Orion's four subsidiaries showed a 19.1% increase in sales and a 45% increase in operating profit compared to the same period last year. Despite worsening external factors and lockdowns in China, strong results were recorded. Although lockdowns in major Chinese cities led to a partial decline in factory operating rates, the quick product portfolio focused on growth channels was a positive response.

Lee Kyungshin, a researcher at Hi Investment & Securities, analyzed, "If the external environment improves on a quarterly basis and Russia's geopolitical risks further ease, there is a possibility of upward revision of operating performance expectations."

In Korea, the sales growth rate increased by 13.6% year-on-year as of April. This is interpreted as continuing high growth due to the expansion of home dining demand from the previous month, the effect of new product launches, the Omicron special demand, and increased offline consumption. The large mart channel, including discount stores, convenience stores, and e-commerce, recorded a 16% increase compared to the same month last year.

The researcher stated, "Unlike competitors, the market was led purely by volume growth, minimizing the impact of cost burdens such as rising raw material and utility prices and increased freight costs through additional market dominance improvement," and added, "Considering reopening-related channels, product responses, and cost-efficiency strategies, there is positive additional expectation for scale expansion and margin improvement even without direct price increases."

In China, the sales growth rate was 15.3% year-on-year as of April. This reflects the impact of recent external factors such as lockdowns in some regions of China, and despite the temporary suspension of operations at the Shanghai factory in early April and the lower reoperation rate compared to before, it is noteworthy that growth was still observed.

In Vietnam, as domestic consumption continued to improve, both the main snack products and new products showed high competitiveness, achieving a high growth rate of 45.5% year-on-year. Russia grew by 35.2% year-on-year in April.

The researcher concluded, "Concerns related to short-term external factors have been reflected in the stock price, but operating results proved these concerns to be unfounded," and diagnosed, "The impact of the China lockdown is a temporary issue, and considering that Russia's geopolitical risks are unrelated to brand power in the local market, the valuation discounted by up to 50% compared to domestic and foreign peers this year is rather a buying opportunity."