[Click eStock] "S&DI, Global Demand for Buldak Bokkeum Myeon Continues to Surge... Excessive Undervaluation Phase"

On November 26, independent research firm ValueFinder analyzed S&DI, stating that ongoing concerns about client internalization are unfounded amid the continued surge in global demand for Buldak Bokkeum Myeon, and that next year’s expected price-to-earnings ratio (PER) of 8.6 times represents a phase of excessive undervaluation. Accordingly, the firm maintained a “Buy” investment opinion and set a target price of 112,000 won.

S&DI is a food additive manufacturer specializing in the production of sauce for Samyang Foods' Buldak Bokkeum Myeon, and was listed on the KOSDAQ market in 2021. Since 2019, Samyang Foods’ export sales have begun to surpass domestic sales, with exports to overseas markets such as China and the United States surging rapidly. To meet this demand, the company expanded its second factory in Miryang, which began operations in the third quarter. In addition, a recent regulatory filing announced that the number of production lines in China has been increased from six to eight. S&DI has also responded by expanding its new plant and renovating existing facilities since October, resulting in an approximate 55% increase in production capacity compared to previous levels.

Lee Chungheon, a researcher at ValueFinder, stated, “There have been two main factors that have weighed on S&DI’s share price: the possibility of internalization by key clients and the overall sluggishness in the consumer goods sector.” He added, “However, considering the nature of B2B companies, expansion decisions are not made independently. If S&DI continues to demonstrate steady growth in performance, these downward pressures can be overcome.”

He projected, “S&DI’s sales for next year will reach 182.1 billion won, with operating profit of 28.2 billion won and net profit of 23.1 billion won.” He further analyzed, “With a PER of about 8.6 times, S&DI’s operating margin of over 15% and sales growth rate exceeding 20% provide ample grounds for a revaluation of the share price.”