Samyang tops Korean ramen makers by market cap, beating Nongshim

South Korean food maker Samyang Foods Co., globally renowned for its Hot Chicken Flavor Ramen, saw its stock hit a record high on Friday after it delivered its first-quarter earnings surprise backed by increased overseas sales of the instant noodle and other food products.

The market cap of Samyang surged 30.0% to 3.36 trillion won ($2.5 billion) on May 17, 38.6% higher than its largest crosstown rival and Shin Ramyun maker Nongshim Co.'s. Samyang’s stock on the main Kospi soared to hit the daily upper limit of 446,500 won as trading started on Friday and maintained the all-time high until the closing.

The stock surged thanks to its January-March earnings greater than market expectations. The share price on Friday is the highest since Korea's first instant noodle maker went public in 1975.

"Samyang significantly increased its profitability in the first quarter, thanks to a surge in overseas sales and the strong US dollar against the Korean won,” said an official from the food maker.

“We will continue to expand earnings in the second quarter by focusing on strengthening localization strategies and increasing sales channels of overseas affiliates,” the official added.

According to Samyang’s report on Thursday, it logged 385.7 billion won in revenue and 80.1 billion won in operating profit for the first quarter, compared with a consensus estimate of 42.4 billion won profit.

The food major’s quarterly revenue overseas soared 85% on-year to 286 billion won, driven by sales growth in the US and China.

The first-quarter revenue of its US unit Samyang America Inc. skyrocketed 209.8% on-year to $56.5 million, led by sales expansion to retail giants including Walmart and Costco and growing popularity of its creamy carbonara flavored spicy ramen dubbed carbo buldak-bokkeum-myeon.

TARGET PRICE DOUBLED

Several local brokerages raised the target share price of Samyang on Friday.

Seoul-based Hanwha Investment & Securities Co. increased the target by 100% to 600,000 won, expecting Samyang’s market cap to rise to a maximum of 4.52 trillion won. This is about 9% higher than the market cap of CJ Corp. on May 17, one of the largest Korean conglomerates that own global logistics, entertainment and food businesses.

Despite the record-breaking price, Samyang’s stock is still undervalued with a forecast of sharp earnings growth, said Hanwha analyst Han Yoo-jung. The food company continues to expand sales to big clients in the US and sales are picking up in China this year, added Han.

Samyang is forecast to have strong growth in exports, said Hyundai Motor Securities Co. analyst Ha Hee-ji. The stock has upside potential despite the significant growth in the first quarter, given the expansion of its ramen factory in Miryang, South Gyeongsang Province next year and the food cost percentage expected to be lowered for a while, added Ha.

Daishin Securities Co. also raised its target price for Samyang stock by 56.3% to 500,000 won on Friday. IBK Investment & Securities Co. increased its target price by 58.6% to 460,000 won on the same day.

Write to Min-Kyoung Shin at radio@hankyung.com

Jihyun Kim edited this article.