"Samyang Foods: Concerns over the impact of falling exchange rates are 'limited'... Expectations for new plant in China"

[Financial News] Kyobo Securities forecast that Samyang Foods' earnings decline due to falling exchange rates would be limited compared with expectations, and that earnings could recover after its new plant in China begins operations next year. It maintained its 'Buy' recommendation and target price of KRW 1.86 million.
Kyobo Securities analyst Kwon Woo-jung said on the 2nd, "Samyang Foods' consolidated third-quarter revenue is expected to reach KRW 818.5 billion, while operating profit is projected at KRW 183.2 billion. This would represent increases of 30% and 40%, respectively, from the same period a year earlier and be in line with market expectations (consensus)."
Although the stock has recently declined somewhat amid concerns about revenue and profitability following the sharp drop in exchange rates, overseas sales are continuing to expand in the third quarter. With labor, marketing and other selling, general and administrative expenses also continuing to decline, profitability is likely to be protected, with only a 0.5-percentage-point decrease from the previous quarter.
The new plant in China, which is scheduled to begin operations next year, is a particular source of optimism. Kwon explained, "We expect Samyang Foods to enter a phase of another step-up in earnings as it ramps up operations at its new plant in China starting in January next year. We understand that the Buldak noodles category is currently outperforming in China's ramen market."
She added, "The capacity freed up by shifting China-bound production to local manufacturing can be used to meet global demand in the United States, Europe and elsewhere. This will also make it possible to enter new countries and expand the customer base, further increasing the potential for top-line growth."

[email protected] Lim Sang-hyuk Reporter