[THE INVESTOR] Ottogi is likely to grow as it continues to roll out a series of home meal replacements, said Samsung Securities on Aug. 7, suggesting a “buy” recommendation and 1.05 million won (US$932.09) target price. 

Based on its portfolio that ranges from curry and instant meals to condiments, the company has secured a dominant position in the market and is generating stable profits. It is further boosting its revenue by launching new HMR products, meeting the growing demand from single households. The firm is notably cementing its position in instant noodle market, expanding cup noodles and adding new products to satisfy fast-changing trends, said analyst Cho Sang-hun.

On the back of burgeoning HMR industry, its revenue and operating profit in three years will grow at an average of 7 percent and 12 percent respectively. Meanwhile it has been acquiring stake in related firms and adding them as subsidiaries, not only cutting costs but also decreasing revenue from internal transactions. The fact that the price of internal transactions is not decided by the market could be a risk in terms of governance structure, the analyst pointed out. 

By Hwang You-mee (glamazon@heraldcorp.com)