[Click eStock] CJ CheilJedang Expands Bio Business Sector

Expansion into Environment, Energy, and Medical & Pharmaceutical Sectors

[Asia Economy Reporter Minwoo Lee] As CJ CheilJedang expands its bio business, there are prospects that it can simultaneously achieve growth and profitability.

On the 26th, Shinhan Financial Investment maintained its 'Buy' rating and target price of 620,000 KRW for CJ CheilJedang based on this background. The closing price the previous day was 379,500 KRW.

CJ CheilJedang has accumulated capabilities in microorganisms, strains, and fermentation through its Green Bio (agriculture and food) business. Through this, it is expanding into White Bio (environment and energy) and Red Bio (medical and pharmaceutical), which have high growth potential. Earlier, in 2016, it entered the PHA market, an eco-friendly bio-plastic that is 100% marine biodegradable, by acquiring the US company Metabolix. Currently, it is building a production system utilizing the facilities of its bio plant in Indonesia, expected to start operations early next year. The expected production capacity is 500 tons, but purchase intentions already amount to 30,000 tons. The company plans to expand production capacity to 65,000 tons by 2025 and 300,000 tons by 2030. Since it utilizes existing infrastructure, the investment cost is low, which is evaluated as highly efficient.

Shinhan Financial Investment estimated PHA sales in 2022 to be about 37 billion KRW. Considering the corporate valuation of the US company Danimer Scientific, CJ CheilJedang's PHA business value is estimated at approximately 370 billion KRW. This corresponds to about 6% of the current market capitalization. Sanghoon Cho, senior researcher at Shinhan Financial Investment, explained, "Early commercialization is possible based on the mass fermentation technology accumulated through the existing Green Bio business," adding, "It can also be used in the group's eco-friendly packaging such as food and distribution, and is positive for expanding health-related businesses such as health functional foods."

CJ CheilJedang's bio division has addressed performance slumps caused by oversupply since 2011 through business diversification. Researcher Cho evaluated, "The specialty amino acid market, including White Bio, is still small in scale but has high entry barriers, resulting in low competition intensity," and added, "Both growth and profitability are favorable, which is also positive from an ESG (environmental, social, and governance) perspective."

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