Samyang Foods' Samsung Electronics bet returns 77% in four months as 'Buldak' cash piles up

Samyang Foods, whose cash generation has surged on the back of its Buldak Bokkeum Myun ramyun's global success, is broadening its treasury management into shares of major listed Korean companies. A stake in Samsung Electronics purchased in March has already generated an unrealized gain of more than 460 million won ($335,000) — a 77.5% return in roughly four months as of the end of June. Analysts say, however, that the company's growth story ultimately hinges not on equity investments but on expanding overseas production capacity and the profitability of its core business.

According to filings with the Financial Supervisory Service's DART system, Samyang Foods acquired shares of Samsung Electronics, Hyundai Motor, Kia and Korea Investment on March 6 for simple investment purposes.

The standout holding is Samsung Electronics. Samyang Foods bought 3,188 shares for 599.95 million won, at an average acquisition price of about 188,190 won per share. As Samsung Electronics' share price climbed, the book value of the stake rose to 1.06 billion won as of June 30 — up 464.84 million won, or 77.5%, from the original purchase price.

The gain is an unrealized paper profit based on the closing share price at the end of the reporting period, not a realized return from a sale. Samsung Electronics shares subsequently pulled back, closing at 268,500 won on Tuesday. Assuming Samyang Foods still holds the position, the estimated value would stand at around 856 million won — lower than the June 30 figure but still above the original investment.

The automotive stocks bought the same day told a different story. Samyang Foods acquired 1,103 shares of Hyundai Motor for 599.61 million won and 3,645 shares of Kia for 606.05 million won. By June 30, the book values had fallen to 545.99 million won for Hyundai Motor and 503.01 million won for Kia — down 8.9% and 17.0%, respectively, from their purchase prices.

Samyang Foods sold its entire Korea Investment stake during the first half of the year, booking a gain of 19.32 million won on the position. Although all four stocks were purchased on the same day, their performance diverged sharply over the following four months.

Samyang Foods' foray into listed equities predates this year's purchases. The company holds 209,396 shares of Hyundai G.F. Holdings, acquired at an original cost of about 3.6 billion won; the book value stood at about 3.31 billion won as of June 30.

It also holds 111,158 shares of Hyundai Green Food, acquired in April 2023 for about 805.9 million won. By June 30, the book value had more than doubled to 1.84 billion won.

Combined, the five major listed holdings — Samsung Electronics, Hyundai Motor, Kia, Hyundai G.F. Holdings and Hyundai Green Food — carried a book value of about 7.27 billion won at the end of June. The figure draws attention in isolation, but it represents only about 1.2% of Samyang Foods' cash and cash equivalents, which stood at 630.6 billion won at the end of the first half.

The surge in investable cash traces back to the global success of Buldak Bokkeum Myun. Samyang Foods posted consolidated second-quarter sales of 770.3 billion won and operating profit of 176.2 billion won, up 39.3% and 46.7%, respectively, from a year earlier.

Overseas sales drove the earnings growth. International revenue reached 645.8 billion won in the second quarter, accounting for 83.8% of total sales — the first time quarterly overseas sales have exceeded 600 billion won. Sales in the United States came to 203.6 billion won and China to 181 billion won, while Europe also continued to expand.

Cash reserves have grown rapidly as well. Samyang Foods' cash and cash equivalents rose from 96.9 billion won at the end of 2022 to 630.6 billion won at the end of this year's first half — more than sixfold in three and a half years. The figure nearly doubled in the first half alone compared with the roughly 330 billion won recorded at the end of last year.

Not all of the cash increase came from ramyun sales, however. In April, Samyang Foods upsized a corporate bond issuance from the original 150 billion won to 200 billion won. Of the proceeds, 130 billion won was earmarked for facility investment — including seasoning-packet manufacturing equipment at its Wonju factory — while 20 billion won was set aside for operating costs such as corporate tax payments and 50 billion won for repaying existing bank borrowings.

Ultimately, the cash-generating power built by Buldak has provided the financial foundation, while the corporate bond issuance is helping the company accelerate its production capacity expansion.

While the Samsung Electronics investment has attracted attention, the real destination for Samyang Foods' capital is production infrastructure. The clearest example is its first overseas manufacturing base — a factory in Jiaxing, Zhejiang Province, China.

Samyang Foods plans to build eight production lines at the Jiaxing plant — six for bag-type noodles and two for cup noodles — giving it annual production capacity of about 1.13 billion units. That is an expansion from the original plan of six lines and annual capacity of about 840 million units. All products from the facility are intended for the Chinese domestic market.

The Jiaxing plant is expected to begin trial operations by year-end and move into full production next year. Once operational, the facility is projected to increase Samyang Foods' total production capacity by about 40%. Local manufacturing in China is expected to improve logistics efficiency and allow the company to respond more quickly to local demand.

Analysts are focused on the scalability of the core business rather than returns from equity investments. Son Hyun-jeong, a researcher at Yuanta Securities Korea, said Samyang Foods is delivering both high revenue growth and strong operating margins among global ramyun makers. She noted that while momentum in the United States and Europe continues, China is emerging as a new growth engine, and supply capacity will expand further once the Jiaxing plant comes online.

Samyang Foods has generated a strong short-term paper gain on its Samsung Electronics investment, but it is the global success of Buldak Bokkeum Myun that has fundamentally transformed the company's scale. The key question going forward is how quickly demand in China, the United States and Europe can absorb the expanded production capacity.