[Click e-Stock] "Samyang Foods Expected to Benefit from Expanded Supply Capacity... Target Price Raised"

On July 7, KB Securities announced that it expects the effect of expanded supply capacity at Samyang Foods to become full-fledged, raising its target price from 1.25 million won to 1.5 million won. The investment opinion remains 'Buy'.

KB Securities analyst Ryu Eunae explained, "We raised our target price as we increased our estimate for the compound annual growth rate of operating profit for 2026 to 2031 from 7.6% to 9.7%, reflecting the additional expansion of supply capacity."

With the completion of the Miryang Plant 2 in June, the expansion of supply capacity has become tangible. Analyst Ryu stated, "The additional supply capacity is 830 million servings per year, which is 20% higher than the previously expected 690 million servings. This is due to the increase in operating hours from 20 hours to 22 hours per day." She added, "With the expanded supply capacity, shipments to major distributors such as Costco in the United States are expected to increase, and profit margins are likely to rise due to an improved product mix."

The effect of a price increase for ramen in the United States in the second half of the year is also anticipated. Analyst Ryu projected, "There is a possibility of a ramen price increase in the US during the second half, and given the strong product demand and low price sensitivity, the effect of the price increase is expected to be maximized."

Samyang Foods' second-quarter results for this year are expected to fall short of market expectations. Analyst Ryu stated, "Samyang Foods' consolidated sales for the second quarter are projected to increase by 25.8% year-on-year to 534 billion won, and operating profit is expected to grow by 33.8% to 119.7 billion won, which will fall short of the operating profit consensus (the average of securities firms' forecasts) of 129.3 billion won." She analyzed, "Profitability improvement compared to the previous quarter will be limited due to several factors: approximately 4 billion won in marketing expenses related to the US Coachella partnership in April amid a decline in the exchange rate, regular salary increases in May, and proactive promotional costs in preparation for expanded shipments to major distributors in the second half."