[Click eStock] CJ CheilJedang, Earnings Improvement in Second Half 'Recommended to Buy at Low Point'

Hyundai Motor Securities announced on the 26th that it maintains a Buy rating and a target price of 430,000 KRW for CJ CheilJedang. Heeji Ha, a researcher at Hyundai Motor Securities, stated, "Following the fourth quarter, the domestic food sector continues to experience negative growth and significant raw material cost burdens, leading to an expected first-quarter performance below market consensus." He added, "Although the bio sector is also inevitably facing profit declines due to industry slowdown and intensified competition, the burden of grain input costs is expected to improve after the first half of the year, maintaining expectations for performance improvement in the second half."

CJ CheilJedang's first-quarter results, excluding Hanjin Transportation, are projected to show sales of 4.4396 trillion KRW, a 2.8% increase year-on-year, while operating profit is expected to decline by 50.1% to 182.2 billion KRW, falling short of market consensus. The food sector is experiencing weak demand for processed and ingredient foods amid a domestic economic downturn, with costs continuing to be pressured by high exchange rates, as seen in the fourth quarter and continuing into the first quarter. The bio sector is also facing inevitable profit declines due to intensified competition during the traditionally slow first quarter. However, if consumer sentiment improves following China's reopening, there is potential for increased demand for nucleotides and feed amino acids.

Based on the current stock price, the 2023 price-to-earnings ratio (PER) is 9.5 times, which is lower than the industry average, indicating a low valuation burden. Researcher Ha emphasized, "Concerns over performance due to weak food demand and bio sector slowdown have already been reflected in the stock price." He added, "Expectations for improved food profitability due to cost reductions in the second half and growth in overseas processed foods, mainly in the Americas, remain valid, and from a trading perspective, we recommend buying at the low point."

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