[Special Stock] CJ CheilJedang's Q3 Operating Profit Falls 5% Below Consensus

[Asia Economy Reporter Lee Seon-ae] CJ CheilJedang is showing a decline of over 5% following news that its third-quarter operating profit fell short of market consensus.

As of 11:02 AM on the 15th, CJ CheilJedang is trading at 395,000 KRW, down 5.28% from the previous trading day. The opening price on the day was 413,000 KRW.

CJ CheilJedang's third-quarter operating profit was 484.2 billion KRW, approximately 6% below market consensus. This is interpreted as having cooled investor sentiment, leading to a sell-off.

Downgrades of target prices by securities firms have also contributed to the cooling of investor sentiment. Kiwoom Securities lowered CJ CheilJedang's target price from 56,000 KRW to 54,000 KRW.

Park Sang-jun, a researcher at Kiwoom Securities, explained, "The profitability of the food division fell short of our expectations, and the increase in labor costs due to the acquisition of a new subsidiary was reflected, causing the results to fall below expectations. Although the slowdown in the bio business sector is regrettable, the performance trend in the food division remains solid."

However, most securities firms maintained their target prices. On the same day, DB Financial Investment maintained a buy rating and a target price of 550,000 KRW for CJ CheilJedang. Cha Jae-heon, a researcher at DB Financial Investment, said, "Excluding CJ Logistics, third-quarter sales increased by 21.7% year-on-year to 5.1399 trillion KRW, and operating profit rose by 20% to 386.7 billion KRW. This is evaluated as a favorable performance improvement that meets the raised earnings estimates of DB Financial Investment."

He added, "In terms of sales and profits by division, results generally met estimates, and growth and performance improvement in North America, including Schwans, were particularly positive. Since acquiring Schwans, market dominance in categories such as dumplings and pizza has become more apparent, and the synergy effect between K-food content and Schwans' distribution network is strengthening, which we view positively."

He also stated, "The Feed & Care (livestock feed) division, which had concerns about performance stability, recorded better-than-expected results due to the expansion of a high-margin product portfolio (such as aquafeed) and successful price pass-through. In the bio division, despite a downturn in the lysine market, operating profit margin remained in the low double digits, and steady growth centered on specialty products continued, which is expected to lead to market revaluation." Furthermore, he emphasized, "Although consolidated operating profit slightly missed expectations due to a slowdown in CJ Logistics' performance, this is unlikely to be a burden on CJ CheilJedang's corporate value."

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