[Click eStock] "CJ CheilJedang, Recent Stock Price Drop Overdone... Time to Buy at Low Price"
[Asia Economy Reporter Park Jihwan] Hana Financial Investment stated on the 24th that despite CJ CheilJedang's first-quarter earnings expected to be in line with market expectations and showing a favorable performance trend, the recent stock price decline is considered excessive. They explained that due to the highlighted advantage of buying at a low price, they maintain a 'Buy' investment rating and a target price of 370,000 KRW.
Sim Eunju, a researcher at Hana Financial Investment, estimated, "The consolidated first-quarter sales and operating profit are expected to be 5.6895 trillion KRW and 240.2 billion KRW, respectively," adding, "These figures represent increases of 13.4% and 34.1% year-over-year, respectively, and are similar to market expectations."
The impact of the domestic COVID-19 spread on earnings is expected to be limited. Researcher Sim Eunju stated, "Domestic processing sales in key categories such as Hetbahn and Home Meal Replacement (HMR) increased by 30% year-over-year, and the strong price trend of bio ASF amino acids and the strong pork prices in Vietnam continued through the first quarter, leading to a meaningful improvement in profitability."
It was analyzed that the recent stock price decline was significant. Regarding the company bonds maturity, which was cited as the cause of the sharp stock price drop, it was explained, "The scale of company bonds maturing this year is 350 billion KRW, of which 150 billion KRW has already been repaid," and "Considering the significantly improved free cash flow (3 trillion KRW) and cash holdings (7 trillion KRW), the market's concerns are somewhat excessive."
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Researcher Sim emphasized, "A balanced improvement in performance across all business divisions is expected this year," and added, "Considering the rarity of being a company free from COVID-19 impact, buying at a low price is a valid point in time."
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