[Click eStock] "Ottogi, Continued Growth This Year... Cost Ratio Improvement Starting Q2"

Hyundai Motor Securities stated on the 16th that Ottogi's cost ratio is expected to gradually improve after the second quarter. They gave a 'Buy' investment rating and set a target price of 560,000 KRW.

Heeji Ha, a researcher at Hyundai Motor Securities, said, "We believe that the effect of this year's price increase and steady growth centered on ramen will continue."

In the first quarter of this year, sales amounted to 856.8 billion KRW, a 15.4% increase compared to the previous year, and operating profit rose by 10.7% to 65.4 billion KRW. This performance exceeded consensus estimates. The sales increase is attributed to the effect of price hikes and the inclusion of Ottogi Ramen Holdings/Joheung's consolidated results.

Researcher Ha explained, "The operating profit margin in the first quarter decreased by 0.4 percentage points compared to the previous quarter," adding, "This is due to the continued burden of costs."

She further stated, "The cost ratio improved in April compared to the previous month, so we expect the cost ratio to improve from the second quarter," and diagnosed, "In the second quarter, growth centered on ramen will stand out along with the effect of price increases."

She continued, "On a consolidated basis, Ottogi Ramen Holdings/Joheung was included in the results, leading to high sales growth," and evaluated, "We can expect external growth due to the inclusion of consolidated results this year."

However, considering that the proportion of internal transactions was high despite the inclusion of consolidated results, the impact on operating profit relative to sales growth is expected to be minimal.