[Click eStock] "CJ CheilJedang, H2 Earnings Momentum to Stand Out"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 620,000 KRW for CJ CheilJedang on the 31st, stating that its earnings attractiveness will become prominent from the second half of the year.

Consolidated sales and operating profit for the first quarter are expected to rise by 4% and 18%, respectively, to 6.0656 trillion KRW and 327.4 billion KRW. Operating profit excluding the logistics sector is expected to increase by 14% to 250.4 billion KRW.

Domestic processed food sales are expected to grow due to strong sales of Lunar New Year gift sets despite high performance last year. Some increases in raw material input costs are expected to be offset by cost efficiency measures, with operating margins projected to remain at last year's level.

The overseas processed food segment continues its high growth trend. Despite a low base effect, cumulative sales of 'Shuangzi' from January to February are understood to have slightly increased compared to the previous year. However, due to the strong Korean won, converted sales are expected to slightly decrease year-on-year. Sales of CJ CheilJedang's subsidiaries in the United States and China are expected to grow by more than 10% compared to the previous year.

Sim Eunju, a researcher at Hana Financial Investment, said, "Bio is expected to contribute around 60 billion KRW to operating profit due to the recovery of pig farming numbers in China and demand for dining seasoning," adding, "Vietnamese pork prices in biological resources are expected to continue, contributing around 50 billion KRW to operating profit."

In the second half of this year, earnings momentum is expected to be highlighted. The secret to earnings improvement is synergy with 'Shuangzi.' Currently, the store penetration rate of 'Bibigo Mandu' in the United States is analyzed to expand from 30.2% at the beginning of last year to 54%. It is expected to expand to 60% by the end of the year.

Researcher Sim said, "Expansion to other channels following mandu is also expected," and added, "Overseas processed food sales are expected to grow by 7.8% compared to last year despite a high base, and the food business division's profit contribution is expected to increase to 40%."

Researcher Sim added, "Since first-quarter earnings are expected to meet market expectations, the stock price will attempt to rebound again."

This content was produced with the assistance of AI translation services.