[Click eStock] "Orion Records High Profit Margin Despite Rising Cost Ratio"

[Asia Economy Reporter Hwang Yoon-joo] On the 21st, SK Securities evaluated Orion as having recorded a high operating profit margin in November despite the increase in manufacturing cost ratio. Accordingly, they maintained a 'Buy' investment rating and a target price of 145,000 KRW.

Park Chan-sol, a researcher at SK Securities, stated, "November sales increased by 25.2% year-on-year to 83.4 billion KRW, and operating profit rose by 26.1% to 14 billion KRW," adding, "Despite the rise in manufacturing cost ratio, shipments increased across all channels including traditional trade (TT), mass retailers (MT), and online, along with the effect of price hikes, resulting in an operating profit margin (OPM) of 16.8%." He explained that shipments increased due to higher consumption during the World Cup period, increased demand at special locations such as rest areas, and the reflection of price increases in the online channel.

In 2023, the focus will be on profitability management in the domestic market. Overseas subsidiaries may see increased growth potential as category-specific expansions are being considered in 2023.

Researcher Park forecasted, "Domestically, differentiation will be attempted through new product launches in various categories including high-growth meal replacement and protein functional food categories, and profitability management activities will continue in preparation for the inflationary environment."

He continued, "In China, demand increases for products such as potato chips were confirmed last summer, and expansion to increase market share is under consideration. In Vietnam, the strategy of continuing new product shipments and expanding the snack line is also being considered." Additionally, in Russia, the addition of Choco Pie flavors, biscuit expansion, and jelly line expansion are expected.