Why the 1.8 Million Won Target Price Was Maintained Despite Samyang Foods Co., Ltd.’s 9% Plunge

[Financial News] Samyang Foods Co., Ltd.’s share price plunged nearly 9% in a single day, but analysts said the decline was excessive. Concerns about the falling exchange rate and weak third- and fourth-quarter earnings fueled selling, but analysts believe the company’s overseas sales competitiveness remains unchanged. Hanwha Investment & Securities maintained its target price of 1.8 million won and its ‘Buy’ rating.
On the 27th, Han Yu-jeong, an analyst at Hanwha Investment & Securities, said, “Concerns that the falling exchange rate would weaken profitability have already been priced into the stock,” adding that “the fundamentals have not changed.”
Samyang Foods Co., Ltd. closed at 1,116,000 won the previous day, down 8.9%. It fell 7.4 percentage points more than the KOSPI that day, marking its second-largest relative decline against the market in the past 10 years. Analysts said selling was concentrated in Samyang Foods Co., Ltd., which derives 83% of its revenue from overseas, as the won-dollar exchange rate fell to the 1,320-won range during the trading session.
However, earnings forecasts have changed little relative to the share price decline. Consensus forecasts for third- and fourth-quarter operating profit have fallen 1.6% from a month ago, while next year’s operating profit forecast has barely changed. Meanwhile, since reaching a peak in late August, the share price has fallen 28%, bringing the projected price-to-earnings ratio (PER) for next year down from 16.6 to 12.0.
Analysts also see limited risk that the falling exchange rate will undermine the company’s competitiveness in overseas markets. That is because overseas prices are set in local currencies, so a stronger won does not directly affect consumer prices. Korean ramen exports also rose 25% year over year to US$1.41 billion from January to September this year.
Analyst Han said, “Brands with strong demand can pass on price increases,” adding that “there has been no numerical evidence whatsoever of resistance to the price hikes.” In fact, Samyang Foods Co., Ltd. raised its overseas selling prices by about 10% in October last year, but its U.S. retail sales value rose 38% over the year.
Analyst Han forecast, “There will still be ample justification for price increases in 2027,” adding that “whether profitability can be protected through price pass-through and cost control will become evident in earnings over time.”
[email protected] Bae Han-geul Reporter