[Click eStock] "Nongshim's Overseas Success with 'Shin Ramyun Tumba' to Drive Share Price Rise"

Target Price Raised to 520,000 Won

On May 29, Korea Investment & Securities stated that "the future rise in Nongshim's share price will be driven by the global launch performance of 'Shin Ramyun Tumba'," maintaining a 'Buy' investment rating and raising the target price by 8.3% to 520,000 won.

Kang Eunji, a researcher at Korea Investment & Securities, explained, "Nongshim plans to invest in marketing expenses for the global market penetration of Shin Ramyun Tumba through the end of the year. Currently, the product has entered major U.S. mainstream distribution channels such as Walmart and Costco (in the LA area), and is also expanding into convenience stores and large channels in Japan and China." She emphasized, "The global launch of Shin Ramyun Tumba is expected to drive a rise in overseas sales and improved profitability, which will in turn lead to a higher share price."

She added, "The target price for Nongshim was calculated by applying a PER multiple of 16 times, which is the upper end of the 2023 PER band. The year 2023 was notable for improved profitability in the domestic business and earnings growth in the U.S. subsidiary, which is similar to the current situation."

Regarding earnings, she assessed, "The worst is over for the domestic market." Nongshim's second-quarter results are estimated at 898.8 billion won in sales and 48.5 billion won in operating profit, up 4.4% and 11.0% year-on-year, respectively. For the domestic business, sales are estimated at 703.3 billion won, up 2.3% year-on-year, and operating profit at 28.3 billion won, up 63.1%. Kang analyzed, "This performance reflects the successful reduction in promotional expenses, which was the main reason for last year's profit decline."

For the North American subsidiary, sales are projected at 159.6 billion won and operating profit at 10.9 billion won, representing a 6.2% increase and a 35.9% decrease year-on-year, respectively. Kang explained, "Profitability will decline due to continued promotional spending to enter mainstream channels with Shin Ramyun Tumba, but the initial entry effect is expected to increase shipment volumes."