[Click eStock] "Orion, February Performance Growth Accelerates... Valuation Appeal"

On the 26th, DS Investment & Securities maintained its investment opinion of 'Buy' and a target price of 150,000 KRW for Orion, stating that "from February this year, solid earnings growth will continue."

Researchers Jihye Jang and Daesung Kim explained, "February will see continued top-line growth due to a low base effect from inventory depletion following last year's holiday gift set sales, channel-specific specialized products from major subsidiaries, and an expansion in new and core product SKUs." They noted that in Korea, price increases due to cost burdens, in China, the launch of season-limited products, and the base effect from last year's sales gap will drive earnings improvement. Additionally, in Vietnam, the introduction of new snack flavors and SKU expansion, and in Russia, the expansion of new clients are expected to be effective.

They added, "Despite Orion showing a high overseas proportion in food and beverage (65% as of this year) and operating profit margin (OPM), the current stock price only reflects a price-to-earnings ratio (PER) of 10 times based on this year's earnings, indicating high valuation appeal."

Orion posted solid results in January this year despite differences in holiday timings across major countries. Sales and operating profit reached 318 billion KRW and 56.8 billion KRW respectively, with an OPM of 17.9%. Year-on-year sales growth rates by subsidiary were Korea 1%, China -11% (local currency basis -18%), Vietnam 13% (6%), and Russia 36% (43%). The slowdown in growth in China was attributed to holiday timing differences and increased manufacturing costs due to rising prices of key raw materials such as cocoa and oils, while in Korea, changes in accounting standards, economic recession, and intensified competition were cited as causes.