Yuanta Securities announced on July 21 that it has raised its target price for Orion from 155,000 won to 172,000 won, an increase of approximately 11.0%, citing stable growth in its China and Russia operations, expected profitability improvements in the second half of the year, and enhanced shareholder returns. The firm has resumed coverage with a 'buy' recommendation.
Analyst Son Hyun-jung stated, "The current stock price is trading at a discount compared to global confectionery companies, with a projected price-to-earnings ratio (PER) of 9 times for 2027. Considering the stable growth in China and Russia, the anticipated profitability improvements, and the strengthening of shareholder returns, we present this target price."
Yuanta Securities estimates that Orion's consolidated revenue for the second quarter will reach 896.1 billion won, with an operating profit of 134.6 billion won, marking increases of 15.3% and 10.8%, respectively, compared to the same period last year. This aligns with market consensus. Strong sales in China and Russia, along with favorable exchange rates, are expected to drive revenue growth, although profitability improvements may be limited due to channel expansion costs in China and cost and promotional burdens in Vietnam.
Regionally, China and Russia are projected to lead performance. In China, sales are expected to grow, particularly in snack shops and e-commerce, with revenue forecasted at 378 billion won and operating profit at 63.2 billion won. In Russia, buoyed by strong sales of pies and jellies, revenue is estimated at 105 billion won, with operating profit expected to rise by 29.9% and 75.0%, respectively, compared to the previous year. The new factory in Tver is anticipated to increase production capacity to 750 billion won annually upon completion in 2027.
This year, consolidated revenue is projected to reach 3.7821 trillion won, with an operating profit of 638.1 billion won. In the second half of the year, the effects of declining prices for key raw materials are expected to expand, and the fixed cost leverage from increased sales in China and Russia is anticipated to drive profit growth.
Regarding its dividend policy, the firm received a positive assessment. Analyst Son noted, "Orion announced its first interim dividend of 1,750 won per share on July 6, marking a significant milestone. Given its commitment to maintaining a high dividend policy, visibility for dividend expansion has increased."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.