'Buldak's Sprint... Samyang Foods Q1 Operating Profit Up 80%

Kiwoom Securities Estimated at 44.9 Billion KRW... 88% Increase Year-on-Year
Domestic Demand Slowed but Exceeded Expectations in China, USA
Original Content Dependency Dropped from 50% Range to 40%

The rapid rise of Buldak continues. It is forecasted that Samyang Foods' operating profit for the first quarter of this year will increase by more than 80% compared to a year ago, thanks to the global popularity of Buldak Bokkeum Myun. With demand surging in G2 countries such as the United States and China, as well as in Southeast Asia and Europe, the overseas sales ratio is expected to surpass 70% for the first time this year.

According to Kiwoom Securities on the 2nd, Samyang Foods is estimated to have recorded an operating profit of 44.9 billion KRW in the first quarter. This is an 88% increase compared to 23.9 billion KRW a year earlier. Sales during the same period are estimated to have increased by 34% to 328.1 billion KRW from 245.6 billion KRW in the previous year. IBK Investment & Securities also predicted that Samyang Foods' first-quarter operating profit growth rate would be in the 80% range. IBK Investment & Securities estimated that Samyang Foods earned an operating profit of 43 billion KRW during this period.

Samyang Foods' remarkable growth is thanks to exports. Although the domestic market has slowed, it has achieved results exceeding expectations overseas, including in G2 countries such as China and the United States. In fact, the total export value of K-ramen in the first quarter increased by 30.1% from 207.86 million USD (approximately 287.2 billion KRW) last year to 270.3 million USD (approximately 373.5 billion KRW) this year, among which Samyang Foods' ramen exports appear to have increased by 42.6%, from 154.9 billion KRW to 220.8 billion KRW.

Kim Taehyun, an analyst at IBK Investment & Securities, analyzed, "Exports to China stood out in March, and demand for Buldak Bokkeum Myun expanded in Southeast Asian regions such as Thailand and Indonesia, as well as in Europe, including the United States." Park Sangjun, an analyst at Kiwoom Securities, also explained, "Thanks to high export growth centered on the United States and the efficiency of advertising expenses, the company seems to have achieved results exceeding market expectations," adding, "The restructuring of the China online channel business has also been completed, normalizing exports."

Additionally, the decline in prices of raw materials such as wheat, starch, and palm oil, along with the rise in the KRW-USD exchange rate, is also evaluated to have contributed to increasing operating profit.

Supported by Buldak Bokkeum Myun exports, Samyang Foods is expected to achieve sales in the 1.4 trillion KRW range and operating profit in the 180 billion KRW range this year. The securities industry is particularly encouraged by Samyang Foods' success in reducing its sales dependence on the original Buldak Bokkeum Myun. The proportion of the original flavor in total Buldak Bokkeum Myun sales decreased by more than 12 percentage points over two years, from 54.1% in 2021 to 41.8% in 2023. Instead, the share of the second most popular flavor, Carbo Buldak, increased significantly from 13.9% to 23.7%, and other flavors also grew their share from 32% to 34.5%.

For Samyang Foods, it was crucial to overcome the 'single brand' risk to achieve steady growth in overseas markets. To this end, along with Carbo Buldak, they launched flavors reflecting local characteristics such as Mala Buldak, Yakisoba Buldak, and Habanero Lime Buldak, and this strategy has paid off. As a result, Samyang Foods' overseas sales ratio is highly likely to surpass 70% this year. The overseas sales ratio of Samyang Foods rapidly grew from 56% in 2020 to 68% last year.

Analyst Kim explained, "Until 2022, the proportion of the original Buldak Bokkeum Myun among export products exceeded 50%, but it shrank to the 40% range last year," adding, "Diversification of the export product portfolio is considered a positive factor for continuous growth in overseas markets."