[Click eStock] "Samyang Foods' Earnings Improvement Outpaces Share Price Rise... Target Price Raised"

Target Price Raised by 27% from Previous Level

On July 1, NH Investment & Securities raised its target price for Samyang Foods from 1.3 million won to 1.65 million won, stating that the company's rapid earnings improvement, which is outpacing the share price increase, will justify its high valuation. The firm maintained its "Buy" investment rating.

Joo Younghoon, an analyst at NH Investment & Securities, explained, "The target price was calculated by applying a price-to-earnings ratio (PER) of 24.5 times to the 2026 net profit attributable to controlling shareholders." He added, "The upward revision is based on higher earnings estimates, a change in the base year for performance, and the application of a valuation premium in consideration of Samyang Foods' high growth rate."

The PER applied to the target price is about twice the industry average. Addressing concerns about overvaluation, Joo stated, "While there may be concerns about overvaluation, it is important to consider the unique situation where the global popularity of the company's flagship product, Buldak Bokkeummyeon, continues to drive demand beyond supply." He continued, "The company is currently justifying its high valuation through earnings growth that is even steeper than the rise in its share price."

Samyang Foods' earnings for the second quarter of this year are expected to meet market expectations. Joo noted, "Second-quarter consolidated sales are projected to reach 544.4 billion won, up 28% year-on-year, and operating profit is expected to increase by 48% to 132.5 billion won, in line with the consensus (the average of securities firms' forecasts)." He added, "Export statistics for ramen confirm that demand for Buldak Bokkeummyeon remains high in the global market, so the company is likely to maintain the strongest earnings momentum in the industry." He further explained, "Although the won-dollar exchange rate fell compared to the previous quarter and marketing expenses increased, resulting in an approximately 1.0 percentage point decline in the operating margin quarter-on-quarter, it still stands at 24.3%, so there is no cause for concern."

In the second half of the year, earnings momentum is expected to strengthen further with the operation of the Miryang Plant 2. Joo commented, "With the start of operations at Miryang Plant 2 in the second half, earnings momentum will be further reinforced." He continued, "Although there are some concerns regarding U.S. tariffs, the average transaction value is not high, so the impact on demand is expected to be limited. Considering the high level of customer loyalty, the company should also be able to respond by raising prices if necessary."