[Edaily Reporter KIM YOON-JEONG ] Korea Investment & Securities assessed that ORION(271560)continued to post solid growth, driven primarily by its overseas operations, despite adverse conditions such as cost burdens stemming from the war in the Middle East. The firm projected that as these cost burdens ease, the rate of operating profit growth will accelerate further in the second half of the year. It maintained its “Buy” investment rating and target price of 195,000 won.

On the 13th, Choi Go-woon, an analyst at Korea Investment & Securities, stated, “Despite various adverse conditions in the second quarter, the company continued to post solid earnings growth, driven primarily by its overseas operations,” adding, “The sales strategy focused on growth channels is generating synergies with product competitiveness, further bolstered by the effects of the weak won.”
June revenue and operating profit increased by 21% and 16%, respectively, compared to the same month last year. All overseas subsidiaries have maintained double-digit growth since the start of the year. In June, revenue in China rose 29%, in Vietnam 13%, and in Russia 42% year-over-year. Domestic operations also saw a 10% increase in revenue, driven by strong e-commerce sales despite restrictions on shipments to certain discount stores.
Profitability fell slightly short of expectations. This was due to one-time costs incurred by the domestic subsidiary, including retroactive wage increases. However, excluding these one-time factors, domestic operating profit is estimated to have slightly exceeded last year’s level.
In Vietnam, the company recorded profits at last year’s level despite the burden of higher utility and raw material costs resulting from the war in the Middle East. The Chinese and Russian subsidiaries saw improved profitability, with operating profits increasing by 34% and 64%, respectively.
Korea Investment & Securities estimated ORION’s second-quarter operating profit, adjusted for consolidation, at 135.9 billion won, a 9% increase year-over-year. By region, operating profit in Korea is expected to decrease by 14% to 41.3 billion won, while China’s is projected to rise by 24% to 64.8 billion won and Russia’s by 57% to 15.4 billion won. Vietnam’s operating profit is estimated to remain at the same level as the previous year at 14.4 billion won.
The company-wide operating margin is expected to decline by 0.9 percentage points year-over-year to 15%. Analyst Choi noted, “Considering one-time factors and the impact of the war, this is in line with expectations,” adding, “Even excluding the effect of the weak won, the demand base overseas is growing structurally, so there is significant room for margin improvement going forward.”
He continued, “As the burden of war-related costs eases, profitability will rebound in the third quarter,” adding, “Although the stock market environment is not currently supportive, ORION’s growth momentum remains unchanged.”
Analyst Choi stated, “Even within the food and beverage sector, Orion will be the first to overcome war-related risks,” adding, “We maintain a ‘Buy’ rating given that the distinctiveness of K-Food deserves to be reevaluated.”
He added, “The 12-month forward price-to-earnings ratio (P/E ratio) has returned to its level at the beginning of the year,” noting, “It is worth noting that overseas capacity expansion is proceeding without a hitch, and efforts to return value to shareholders are being strengthened, including the company’s first-ever interim dividend.”