On May 16th, Samyang Foods Foods reported that its operating profit for the first quarter of this year on a consolidated basis increased by 235% compared to the first quarter of last year, reaching $60.4 million. Sales during the same period rose by 57% to $291.5 million. As a result, Samyang Foods announced first-quarter results that far exceeded market expectations, leading to a significant surge in its stock price due to strong optimism in the securities market.
On May 17th, according to the Korea Exchange, Samyang Foods’ stock price hit the upper limit as soon as trading began. As of 1:30 PM that day, Samyang Foods’ stock was trading at $337.8, up $77.9 (29.99%) from the previous session.
Samyang Foods has been recording a new high for 52 weeks in a row, and a Volatility Interruption (VI) was triggered due to a surge in buying orders as soon as the market opened. A Volatility Interruption is a safety mechanism that is triggered when the transaction price for individual stocks exceeds a certain range, preventing sudden fluctuations in individual stock prices.
When a volatility interruption mechanism is triggered, general trading is suspended and a cooling-off period of 2 to 10 minutes for single-price trading and an arbitrary extension of 30 seconds is implemented to stabilize the price of specific stocks.
Samyang Foods’ stock had been on a steady rise, but after the first-quarter results were confirmed on the 16th, there was a significant surge in buying. If this price is maintained until the market closes at 6 PM, Samyang Foods’ market capitalization will be $2.53 billion, an increase of $584 million in a single day. From April 17 to May 17, Samyang Foods’ market capitalization increased by a total of $857 million.
Samyang Foods reported a consolidated operating profit of $60.4 million for the first quarter, a 235% increase from the previous year, with sales up 57% to $291.5 million. This strong performance was driven by an 83% increase in overseas sales, which reached $218.4 million compared to the same period last year.
Particularly, the growth rate of sales in the US and China was high. The number of major channels entering Walmart and Costco Wholesale Corporation in the US increased, and due to the sensational popularity of the Carbonara Buldak noodles, Samyang America’s sales increased by 209.8% to a record $42.7 million.
Also, Samyang Foods Shanghai Co., Ltd., a Chinese corporation, recorded a sales revenue of 500 million yuan ($78 million), showing a growth rate of 194% compared to the same period last year. This is speculated to be due to the growth from strengthening online distribution channels in China and diversifying products such as Yangnyeom Chicken Buldak Bokkeum Myun and Buldak sauce.
The Carbonara Buldak noodles have been spreading like wildfire on social media, leading to a sharp increase in global demand.
When Samyang Foods achieved outstanding performance that far exceeded market expectations, the securities market also boldly raised its target price for Samyang Foods. Hanwha Investment & Securities decided to raise the target price of Samyang Foods by 100% from $230.9 to $461.8, and an analyst in charge of Samyang Foods said, “I did not expect such a rise. It is very unusual for a food stock to surge this much.” Samyang Foods doubled its corporate value with just one quarter’s performance, proving its business capabilities. An analyst at Hanwha Investment & Securities predicted that the market capitalization could grow up to $3.5 billion.
Similarly, DS Investment & Securities raised Samyang Foods’ target stock price by 92% from $200 to $384.7. IBK Investment & Securities increased its target from $223.4 to $354.7, Daishin Securities from $246.5 to $384.7, and eBest Investment & Securities from $269.6 to $346.1.
Jung Han Sol, an analyst at Daishin Securities, pointed out, “Despite limited additional production capacity until the Samyang Foods’ Milyang Plant 2 is operational next year, the company successfully responded to the increasing overseas demand strategically in the first quarter, achieving record-high performance in terms of both size and profitability.” Jung added, “With the reduction in major grain prices easing cost burdens and the expansion of high-margin overseas sales, high profitability is expected to be maintained, leading to an upward revision of earnings estimates.”
Han Yoo Jung, a researcher at Hanwha Investment & Securities, also positively evaluated Samyang Foods’ stock price forecast, saying, “Although the historical high has already been renewed, it is still undervalued due to the steep upward revision of the earnings forecast.”
Meanwhile, Samyang Foods is attracting market attention after surpassing the industry staple, Nongshim. Samyang Foods, the original ramen company, which was pushed back by Nongshim after experiencing the 1989 tallow crisis, is expected to continue to reverse its market capitalization by greatly surpassing Nongshim’s performance.
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