Treasury share disposal is to back China factory expansion: Samyang Foods

(Yonhap)

Samyang Foods Co. said on Wednesday that the sale of its entire treasury shares worth 102.7 billion won ($69.8 million) “was a strategic decision” to secure long-term growth drivers, including expansion of the company’s factory in China.

The remarks come as the recent sale prompted market speculation that the move was intended to ease financial pressure or respond to potential regulatory changes.

The company sold 74,887 treasury shares on November 20 at 1.3 million won per share, totaling 102.7 billion won. The shares were purchased by three foreign institutional investors.

Some analysts suggested that Samyang moved to dispose of the shares ahead of proposed amendments to the Commercial Act that would overhaul treasury share rules or that the sale was aimed at improving the financial sheet.

Samyang Foods dismissed the speculation, saying the sale was “a strategic move to secure long-term growth drivers, including expansion of our China factory.”

The facility is expected to expand from six to eight production lines, boosting annual capacity by 37.8 percent from 820 million units to 1.13 billion units.

The global popularity of Buldak Bokkeum Myeon, a spicy instant noodle, has continued to rise sharply.

Industry officials note that overseas demand is growing and that “supply is struggling to keep up.”

Although China’s instant noodle market is valued at $16.7 billion, Samyang’s market share remains only around 2.5 percent, leaving significant room for expansion.

Samyang Foods emphasized that although U.S. sales have already surpassed those in China, the Chinese market still accounts for a substantial share of its global revenue.

The company also emphasized that interpretations suggesting the sale was for financial stability lack merit.

The company’s end-of-quarter debt ratio is just 89.7 percent and its cash flow remains solid.