Asia Tea Time - #88 ☕

Samyang's Buldak fire noodles and the process of buying insurance in Asia

Author

Tim Phillips
January 26, 2025 • Estimated Reading Time: 7 minutes

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This week I talk how Korean Buldak fire noodles have gone viral and why keeping it simple when buying insurance in Asia will get you the best results.

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Macro in Asia

Investors look for more gains from Korean noodle maker after blockbuster 2024

Despite the Korean stock market falling in 2024, many hedge funds saw success in the country by investing into Korean instant noodle maker, Samyang Foods (KRX: 003230) – knowns for its iconic spicy Buldak noodles.

Shares in the noodle company soared over 250% in 2024, while the benchmark KOSPI Index in Korean actually fell 10%.

Why it’s happening

  • Any stock that stands out in Asia’s worst-performing stock market last year deserves more investor attention and it’s certainly getting more love from professional investors.

  • Samyang’s Buldak – fire chicken – noodles are instantly recognisable by their black packaging with the cartoon chicken in the bottom corner.

  • The company’s products have gone viral after various celebrities have been posting of the Buldak challenge. Celebs have documented their Buldak travails – US rapper Cardi B drove 30 minutes just to get her hands on a packet of Buldak carbonara ramen.

Why it matters

  • Korean products, from Squid Game to K-pop, are going global and now investors can add noodles to the list, too.

  • Apparently, Samyang hasn’t been able to meet the overwhelming demand to fill shelves from the likes of US retailing giants Walmart and Costco.

  • The noodle maker’s extraordinary success in overseas markets, such as the US and China, has seen the firm set up a European company to try to boost sales on the continent.

What’s next?

  • Can the company’s “hype” moment continue and will earnings follow suit? Given the staying power of many Korean exports these days, it wouldn’t be a surprise to see it prosper but investors need to monitor its business closely.

Tim’s Take

All things Korean seem to be “in” these days. Whether it’s globally-successful hit songs like “APT” by Blackpink’s Rose or Samyang’s Buldak noodles, Korea’s “soft power” is the envy of many nations.

Samyang’s sales soared by over 44% year-on-year to KRW 1.2 trillion (US$839 million) in the first nine months of 2024 – versus the same period in 2023 – and around 75% of that came from exports of noodles.

The fiery nature of Buldak noodles (and its Samyang’s share price performance) has made its key competitor – Nongshim Co (KRX: 004370), known for its Shin Ramyun noodles – look decidedly bland.  

Indeed, the Shin Ramyun giant has seen its shares slump by close to 7% in 2024, broadly in line with the Korean stock market. Over the past five years, Nongshim’s stock has risen by 53%, less than one-tenth of the 580% return from Samyang shares over the same timeframe.

Despite all this great news, Samyang is still plagued by something that ails the broader Korean market – corporate governance concerns.

Samyang CEO Kim Jung-soo and her husband were found guilty in 2020 of embezzling company funds worth more than KRW 5 billion and she was given a suspended sentence (and pardoned last year).

While Japan has made strides in recent years to improve corporate governance and attract international investors, in Korea things haven’t progressed as fast..

Overall, it highlights that being “active” in one of Asia’s worst markets in 2024 certainly paid off. Yet, it remains nearly impossible to identify (in advance) when these “viral” moments will appear.

Samyang’s success will no doubt be riding on consumers staying spicy on their Buldak noodles in the years to come.

Tim’s Money Tip of the Week

Insurance. It’s typically something no one wants to deal with but we know we have to – we could even call it “boring”.

But even the most boring things are still necessities. The same goes for insurance. The problem with the insurance industry in Asia is that it’s a minefield.

That minefield is made up of product pitches, vested interests, and endless confusion. When it comes down to purchasing insurance, we should be doing it on a “term” basis and buying only what we require.

For big-ticket insurance items like health and life, the earlier we get coverage, the better for our future premiums (i.e. they won’t be so pricey). So, it makes sense to get your coverage sorted there first, even if you are young, single, have no kids and just started working.

What we should try to avoid are “whole life” plans or investment-linked plans (ILPs) unless absolutely necessary. I say that because beneath the coverage, you will find a mountain of fees and “gotcha” clauses that lock up you money for way longer than you thought and with investment performance that is sub-par to boot.

When it comes to insurance, like many things in life, simple is best. Buy only what you need, buy “term” and scout around for the best deal.