“Exchange rates are no problem either” ... Samyang Foods, maker of Buldak (Korean spicy fire chicken), sustains strong growth

[Financial News] On the 9th, LS Securities maintained its “Buy” rating and target price of 1.8 million won for Samyang Foods Co., Ltd., citing its strong growth.
Park Seong-ho, an analyst at LS Securities, said, “In the fourth quarter, growth led by the U.S. and some deferred sales from the European subsidiary are expected to be reflected. Although the Chinese subsidiary will enter its off-season, revenue could still grow quarter on quarter thanks to more operating days and the increase in average selling prices (ASP) resulting from an improved overseas sales mix.”
He forecast that “although there are concerns that a stronger won next year could reduce revenue and profits, those effects will be offset by overseas price increases and SG&A cost savings.”
The report also highlighted improved production capacity. With the Chinese plant having begun operations last January, annual production capacity is expected to increase by about 40%. Medium- to long-term growth is also expected to continue amid expectations for expansion of a second overseas plant.
Samyang Foods Co., Ltd. posted revenue of 791.8 billion won and operating profit of 196.1 billion won in the third quarter. Despite the stronger won and temporary delays in revenue recognition caused by a change in local trading partners in Europe, it posted its best-ever quarterly results.
Park analyzed, “Cost pressures, including higher energy costs that have continued since the first half and rising raw material prices, intensified, but we defended profitability by controlling SG&A expenses,” and added, “Reflecting lower oil prices, overseas logistics costs fell by about 11 billion won, and advertising and promotional expenses were cut by about 7 billion won compared with the second quarter.”

[email protected] Seo Min-ji Reporter