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On Wednesday, Morgan Stanley (NYSE:MS) analysts initiated coverage on Samyang Foods (003230:KS) with an Overweight rating and set a price target of KRW1,400,000.00. The analysts highlighted the company’s significant share price increase, which has grown approximately fivefold since the end of 2023, making it the largest food and beverage company in Korea by market capitalization.
The analysts pointed out that Samyang Foods has ambitious plans for capacity expansion, with an 81% increase expected by the end of 2027 compared to the end of 2024. They also noted the company’s efforts in distribution expansion and average selling price hikes, which could drive a 30% compound annual growth rate in overseas sales from 2024 to 2027.
Morgan Stanley estimates that the total addressable market for Korean noodles could grow from $33 billion in 2023 to $60 billion in 2027, an 80% increase. While they believe near-term earnings growth from capacity expansion might already be reflected in the stock price, they see further potential for share price growth due to the company’s sustained growth story.
Additionally, the analysts see opportunities for Samyang Foods to increase sales in mainstream U.S. retail channels and identify Europe and the halal market as key areas for expansion. They noted that the stock is trading at 17 times the next twelve months price-to-earnings ratio, which is above its five-year historical average of 9x and compared to its Asian instant noodle peers at 16x.
Overall, Morgan Stanley believes that the market will increasingly focus on Samyang Foods’ strong long-term growth prospects, which could drive further multiple expansion.
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