[Click eStock] "Orion, Price Increase Effects Begin in March... Target Price Up"

Target Price Raised from 130,000 KRW to 140,000 KRW

Daishin Securities raised the target price for Orion from 130,000 KRW to 140,000 KRW on the 19th, anticipating that the price increase effect will fully materialize starting in March. The investment rating was maintained as 'Buy.'

Jung Hansol, a researcher at Daishin Securities, explained, "The target price was raised due to changing the target year for valuation to 2025," adding, "Despite the recent stock price rise, considering the solid domestic performance and high overseas sales ratio, the valuation burden is limited."

The price increase effect is expected to fully take effect from March. With rising raw material costs such as cocoa and oils, there is a cost burden, and domestically, some product prices were raised starting last December. Researcher Jung said, "As the price increases are sequentially reflected across channels, the price increase effect is expected to fully materialize from March," and analyzed, "Overseas, the company plans to defend margins through efficient selling and administrative expenses, but there is a possibility of overseas price increases due to cost burdens."

Daishin Securities forecasts Orion's first-quarter performance this year to show sales of 792 billion KRW, a 6% increase year-on-year, and operating profit of 128.8 billion KRW, up 3%. Researcher Jung said, "Despite a reduction in the Chinese and Vietnamese holiday effects, sales are expected to grow due to favorable exchange rates," but added, "However, margin decline is anticipated due to increased costs of some raw materials such as cocoa and oils."

In the first quarter, domestic sales are expected to increase through expanded value-for-money products and growth channels such as e-commerce and convenience stores, despite weakened consumer sentiment. Researcher Jung noted, "However, some channels have reclassified promotion costs previously recognized as selling expenses as sales deductions, offsetting sales, so sales are expected to grow by 1% year-on-year," and forecasted, "The price increase effect will be fully reflected from March, gradually easing the cost burden." In China, sales in Korean won are expected to increase by 4% due to favorable exchange rates, but a decline is anticipated in local currency terms due to a reduced holiday calendar effect. In Vietnam, sales are estimated to increase by 7% due to holiday gift set shipments and active new product launches. Researcher Jung explained, "In Vietnam, product competitiveness continues to strengthen, achieving first place in market share for rice snacks following pies and raw potato snacks, so sales growth is expected to continue," and added, "Despite rising raw material prices, margin improvement is expected year-on-year due to reduced promotions."