[Click eStock] "Nongshim's 'Export Factory Investment'... Maintaining Top Industry Favorite"

Shinhan Investment Corp. maintained its buy rating and target price of 540,000 KRW on Nongshim on the 2nd, stating that "an increase in domestic and international sales volume in the second half of the year, easing of cost burdens, and expansion of overseas momentum are expected."

On the same day, researchers Sanghoon Cho and Taehun Kim of Shinhan Investment Corp. said, "We maintain our top sector pick opinion on Nongshim. The recent stock price adjustment has significantly eased the valuation (stock price level relative to corporate value) burden."

They particularly anticipated the expansion of overseas momentum through investment in export-only factories. Researcher Cho said, "In the case of domestic companies, they are actively expanding production facilities and product lineups to satisfy the tastes of various countries and ethnicities," adding, "Nongshim is also implementing an aggressive strategy to target overseas markets, including a logistics center opened in June and an export-only factory opened last month." The new expansion line at the second U.S. factory is also scheduled to start additional operations this year.

Regarding Nongshim's decision to build a new ramen factory domestically for the first time in 17 years, Researcher Cho said, "With the global increase in ramen demand, the company decided to invest in an export-only factory," adding, "It is scheduled to be completed in April 2026 with an investment of 191.8 billion KRW. In June, they also announced an investment of 229 billion KRW for a logistics center in Ulsan, to be completed by October 2027." Since the existing export production capacity at the Busan factory is 600 million units and the new factory's production capacity is 470 million units, the total production scale is expected to increase by about 80% after completion. Europe, which has been rapidly growing recently, is a major target region.

Researcher Cho added, "The investment funds were raised through the issuance of exchangeable bonds using treasury shares (300,019 shares, 4.93%, 138.5 billion KRW). While this is somewhat disappointing in terms of the recent value-up trend of treasury share repurchases and cancellations, the 0% interest rate means there is no burden on the financial structure, the exchange price (461,500 KRW) is high, and the conversion conditions are strict, making it positive."