[Click eStock] “CJ CheilJedang, Global Food Sales Growth Trend Valid”

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a Buy rating and a target price of 550,000 KRW for CJ CheilJedang on the 4th, stating that although there may be short-term fluctuations in earnings forecasts due to changes in the bio and F&C (foodservice) sectors, the growth trend centered on global food remains valid.

CJ CheilJedang's expected sales for Q4 are 6.7 trillion KRW, and operating profit is projected at 331.2 billion KRW, representing growth of 9% and 12% year-over-year, respectively, generally meeting market expectations. Excluding Korea Express, sales are expected to be 3.96 trillion KRW and operating profit 226.4 billion KRW, increasing by 14% and 9% compared to the previous year.

Sales in the food sector are expected to have grown by 13%, likely influenced by high growth in global food sales and price increases of key products. The bio sector is estimated to have increased sales by about 25%, reflecting higher selling prices and volumes due to favorable market conditions for feed amino acids and strong performance from Selecta. The F&C sector is expected to have grown sales by 3%, affected by a decline in pork prices in Vietnam and rising feed raw material input costs.

Researcher Sangjun Park of Kiwoom Securities said, "Overall sales are expected to exceed the company's guidance due to favorable amino acid market conditions," adding, "Operating profit is expected to meet company guidance levels due to incentives and weak market conditions in the F&C sector."

Steady profit growth in the food sector is expected to continue this year. Due to the base effect on earnings in the bio and F&C sectors, the company's operating profit growth rate is analyzed to be better in the second half compared to the first half. Bio faces a high base effect in lysine performance due to logistics disruptions of competitors in Q2, and F&C has a high base in profitability from strong pig farming conditions in Vietnam in the first half of last year.

The company's current stock price fell due to concerns over increased investment in Red Bio and deteriorating bio and F&C market conditions but has partially recovered from overselling. Researcher Sangjun Park explained, "Improved profitability from price increases of key products and the strategy to scale up global strategic products centered on dumplings will continue to improve performance in the core processed food business," adding, "It is encouraging that dumplings' sales share in the U.S. grocery channel has expanded to the high 20% range."

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