[Click eStock] "Nongshim, Slower-than-Expected Overseas Sales Recovery... Target Price Down"

Target Price Revised Downward by 4% Compared to Previous Level

Daishin Securities lowered the target price for Nongshim from 550,000 KRW to 530,000 KRW on the 24th, citing expectations that the company's third-quarter performance this year will be weaker than anticipated. The investment rating was maintained at 'Buy.'

Jung Hansol, a researcher at Daishin Securities, explained, "We lowered the sales estimates and target price due to a slower-than-expected recovery in overseas subsidiary sales. Although we expected performance to recover from the third quarter thanks to easing base effects in the Americas and the replacement of distributors in China, the results were weaker than expected, making short-term disappointment inevitable."

Daishin Securities expects Nongshim's third-quarter sales to increase by 3.3% year-on-year to 884.1 billion KRW, while operating profit is forecasted to decline by 3.0% to 54 billion KRW, falling short of previous estimates. Researcher Jung said, "Separate sales are projected to rise 5.2% year-on-year to 694.2 billion KRW, driven by eased pressure from the Shin Ramyun price cut implemented last July, strong sales of new products such as Chapagetti Black, and high export growth. With major raw material contracts concluding, cost burdens are expected to ease, and cost efficiency is anticipated to improve quarter-on-quarter through profitability-focused management. However, considering that offline traffic has not significantly recovered, profitability is expected to improve compared to the previous quarter rather than year-on-year."

The outlook suggests that further stock price declines will be limited. Researcher Jung stated, "Recent price adjustments have eased valuation pressures, so additional declines are expected to be limited. We anticipate gradual recovery in sales in the Americas through the start-up of a new production line in the U.S. at the end of the third quarter, expanded shelf space within Walmart, and growth in the South American market. The contraction in Chinese sales is narrowing compared to the previous quarter, and with the effect of the November Singles' Day, a recovery in Chinese sales in the fourth quarter is expected. Therefore, factors for performance improvement in the second half remain."