[Click eStock] "Orion, Left Out of K-Food Rally... Q4 Rebound Expected"

Shinhan Investment Corp. forecasted on the 25th that Orion, the leading company in the sector that has been sidelined in the K-Food rally, will rebound starting from the fourth quarter.

Orion Product Image Collection

Sanghoon Cho, a research fellow at Shinhan Investment Corp., diagnosed, "The reason Orion was excluded from the stock rally of domestic food and beverage companies in the first half of the year is due to low sales growth and investments in bio companies unrelated to its core business."

Orion's sales growth rate by country in August was sluggish: South Korea (-1.5%), China (-3.5%), Vietnam (+2.9%), and Russia (+27.9%). Research fellow Cho analyzed, "Sales in Chinese yuan decreased by 7%, and a sales gap occurred due to the transition of some distribution channels to indirect sales through small retailers."

On the other hand, operating profit performed well in most regions: South Korea (+3.4%), China (+23.9%), Vietnam (+9.8%), and Russia (+33.3%). He stated, "The transition of small retailers in online and bulk channels is 100% complete, and over 90% complete in discount store channels," adding, "Starting from the fourth quarter, as product and channel competitiveness strengthen, sales and stock prices are expected to recover."

He continued, "The current stock price is excessively undervalued at around 9 times the price-to-earnings ratio (PER)," and predicted, "With future new product launches and expansion of distribution channels, market share will increase, resolving the undervaluation."