[Click eStock] "Nongshim, Price Increase Effects to Fully Materialize from Q2"

Target Price Raised from 450,000 KRW to 500,000 KRW

On the 7th, IBK Investment & Securities raised the target price for Nongshim from 450,000 KRW to 500,000 KRW, expecting that the price increase effect of major products will begin to appear in earnest from the second quarter of this year and contribute to improved performance. The investment opinion was maintained as 'Buy.'

On the previous day, Nongshim decided to raise the domestic shipment prices of 17 products (14 types of ramen + 3 types of snacks), including Shin Ramyun and Shrimp Crackers, by an average of 7.2%. This will be applied from the 17th. It is the first price increase in two and a half years since September 2022. It is evaluated that Nongshim, which had experienced a decline in operating margin due to rising costs of labor, electricity, and major raw materials such as palm oil and soup ingredients, has now found some relief.

Researcher Kim Taehyun of IBK Investment & Securities said, "Considering that the sales proportion of products subject to the price increase is about 71%, and export products to Europe and Southeast Asia are excluded, it is expected that this price increase will result in an increase of about 78 billion KRW in domestic sales and 27 billion KRW in operating profit this year." He presented Nongshim's expected consolidated sales and operating profit for this year as 3.7372 trillion KRW and 211.9 billion KRW, respectively, which are increases of 8.7% and 30% compared to the previous year.

Researcher Kim explained, "Depending on changes in tariff policies in countries including the United States, there is a possibility of price increases for products of overseas subsidiaries in the US and China in the future," adding, "The Chinese subsidiary procures some raw materials from the US, and the US subsidiary also exports products to Canada and other countries."