农心（004370 KS）：持有：成长的烦恼

Issuer of report:TheHongkong and ShanghaiBanking Corporation Limited, Seoul SecuritiesBranchView HSBC Global Research at:https://www.research.hsbc.comListen to our insightsFind out moreHSBC Global Research PodcastsMAINTAIN HOLDTARGET PRICE(KRW)PREVIOUS TARGET(KRW)450,000400,000SHARE PRICE(KRW)UPSIDE/DOWNSIDE425,500+5.8%(as of26 May 2025)MARKET DATAMarket cap(KRWb)2,588Market cap(USDm)1,8903m ADTV (USDm)10FINANCIALS AND RATIOS(KRW)Year to12/2024aHSBC EPS25,861HSBC EPS (prev)25,744Change (%)0.5Consensus EPS26,971PE (x)16.5Dividend yield (%)1.2EV/EBITDA (x)5.8ROE (%)6.252-WEEK PRICE(KRW)Source:LSEGIBES, HSBC estimatesKaren Choi*Head of Consumer & Retail Research, Asia PacificThe Hongkong and Shanghai Banking CorporationLimited, Seoul Securities Branchkaren.choi@kr.hsbc.com+82 2 3706 8781Sophia Jung*Associate, Consumer ResearchThe Hongkong and Shanghai Banking CorporationLimited, Seoul Securities Branchsophia.jung@kr.hsbc.com+822 3706 8774* Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulationsEquitiesFood ProductsKorea05/2411/24Target price: 450000High: 575000 Low: 326000 Current: 425500 ◆◆◆ Free floatBBGRIC12/2025e32,02631,2212.630,23113.31.44.87.1 50%004370 KS004370.KS12/2026e12/2027e33,95035,25333,565na1.1na33,26136,14612.512.11.61.94.13.67.17.029000045000061000005/25 2Financial statementsYear to12/2024a12/2025e12/2026eProfit & loss summary(KRWb)Revenue3,4393,6903,913EBITDA286321328Depreciation & amortisation-123-114-111Operating profit/EBIT163207217Net interest2225PBT218260276HSBC PBT218260276Taxation-60-65Net profit157195207HSBC net profit157195207Cash flow summary(KRWb)Cash flow from operations273288309Capex-123-150-100Cash flow from investment-382-201-145Dividends-30-36Change in net debt-157-113-179FCF equity150138209Balance sheet summary(KRWb)Intangible fixed assets7469Tangible fixed assets1,5801,6211,615Current assets1,5831,7661,991Cash & others8921,0041,183Total assets3,4373,6563,870Operating liabilities673727770Gross debt172171171Net debt-881-994-1,174Shareholders' funds2,6722,8322,998Invested capital1,6711,7241,716Ratio, growth and per share analysisYearto12/2024a12/2025e12/2026eY-o-y % changeRevenue0.87.3EBITDA-13.412.2Operating profit-23.126.8PBT-5.819.5HSBC EPS-8.523.8Ratios (%)Revenue/IC (x)2.12.2ROIC7.59.4ROE6.27.1ROA4.24.8EBITDA margin8.38.7Operating profit margin4.75.6EBITDA/net interest (x)Net debt/equity-33.0-35.1-39.1Net debt/EBITDA (x)-3.1-3.1-3.6CFfrom operations/net debtPer share data(KRW)EPS Rep (diluted)25,86132,02633,950HSBC EPS (diluted)25,86132,02633,950DPS5,0006,0007,000Book value439,285465,607492,902Financials & valuation:Nongshim EstimatesWe reflect full 2024 financials and introduce our 2027 estimates in this report.We raiseour 2025-26 OP estimates by1-2%as weadjust our growth and margin forecast inthe overseas markets.In detail, we nowforecast Korea sales to showsteadygrowth of5-8% in 2025-26 (from2-5%)with a higher OP margin of 4.5-4.9% (previously4.1-4.4%) to reflect price hikesand limitedvolume decline.For overseas markets, we forecast US sales to grow5% (from12%), Canada5% (from10%), Japan 15% (unchanged), Australia 20% (unchanged), and Vietnam 20% (from25%) in 2025. For mainland China, we think a2% sales pickup isreasonable (from 5%) aftertwoconsecutive years of decline.In termsof 2025 OP margin assumptions, we now assume6% for the US (from8.4%),4% forCanada (from3.1%), 5% for Japan (unchanged),4% for Vietnam (from2.5%), and10% forChina (9.5%). For the Korea business, we nowforecast a 4.9% OP margin in 2025e (from4.4%). 9 Valuation and risksWe continue to use anSOTP approach toderive our target price. We now use2026e(previously2025e)as the valuation base yearas webelieve the market needs to focus on earningsimprovement beyond 2025. For thecompany’s core operations, we continue to apply a targetEV/EBITDAmultiple of 4.2x,to factor in weaker earnings momentum,which is at thethree-yearaverage of low-endtrading band during 2022-24, given the high base effect and potentialstructural challenges we expect beyond 2024.We raise our target price to KRW450,000 (fromKRW400,000)as we roll over our valuation base year to 2026ein addition toaslight increase inour earnings estimates. Our target price implies c6% upside from current levels. We maintain ourHold rating on the stock because we expect a delay in earnings turnaround and weak margins topersist on the back of rising promotional expenses.Figure25.Nongshim–SOTP valuation approach_________NewEstimateyearValuation(KRWbn)Per sharevalue (KRW)Contribution20261,376.4240,1061,376.4240,1061.933320261,173.5204,7102,551.9445,149450,000Upside risks:1) stronger-than-expectedgrowthfrom overseas marketsaccompanied bymargin expansion;2) ease ofcompetition or consumption improvement at homeor additionalASP hike; and3) stabilisation of raw material costs.Downside risks:1) intense competition, which may result in OP margin deterioration;2) another further sharp increase in r