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Photo=Nongshim |
[Alpha Biz= Reporter Kim Sangjin] Nongshim, which saw a sharp rise earlier this year amid the K-food boom, has recently hit its lowest share price of the year. The company's stock has fallen significantly following disappointing Q2 and Q3 earnings results, which did not meet market expectations.
As of the 18th, Nongshim's share price has dropped by 43.3% from its highest point of the year on June 17th. On the 15th, it briefly fell to 317,000 won, marking a year-to-date low. Among food and beverage companies, Nongshim experienced one of the largest declines, while Samyang Foods, another major player in the ramen industry, saw a smaller drop of 21.7%. The gap in market capitalization between Samyang Foods and Nongshim has widened to 2 trillion won, with Samyang Foods valued at 4.05 trillion won and Nongshim at 1.98 trillion won as of the 15th's closing price.
Nongshim, traditionally considered a defensive stock due to its stable performance even during economic downturns, has struggled in recent months. This is partly due to the global K-food trend that boosted the company’s exports earlier in the year, including ramen and gimbap, which became increasingly popular abroad. As a result, Nongshim's stock price surged by about 65% from March to June, driven by expectations of strong earnings growth. In line with this, the company also announced large-scale investments to increase export capacity, including a 229 billion won logistics center in Ulsan and a 191.8 billion won export-focused factory in Busan.
However, despite these positive prospects and investment plans, Nongshim’s earnings for Q2 and Q3 fell short of expectations. In Q2, the company reported sales of 860.7 billion won and operating profit of 43.7 billion won. While sales increased by 2.8% year-on-year, operating profit declined by 18.7%, falling below the market consensus of 51.3 billion won. Increased costs due to higher raw material prices and promotional discounts contributed to a decrease in operating profit margin, which fell by 1.7 percentage points compared to the previous year.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
