[Click eStock] CJ CheilJedang, Attractive Stock Price Considering Earnings Improvement
Hana Securities announced on the 18th that it maintains a buy rating and a target price of 620,000 KRW for CJ CheilJedang. Although the first-quarter earnings were disappointing, considering the expected improvement in the second half, the stock price is judged to be too cheap.
Sim Eun-joo, a researcher at Hana Securities, emphasized, "The current stock price is only 8 times the 12-month forward price-to-earnings ratio (PER)," adding, "It is an effective time for low-price buying aimed at improving earnings in the second half."
The first-quarter consolidated sales and operating profit recorded 7.0712 trillion KRW (1.3%) and 252.8 billion KRW (-42.0%), respectively, falling short of market expectations. Excluding the logistics sector, consolidated sales and operating profit were 4.4081 trillion KRW (2.1%) and 150.4 billion KRW (-58.8%), respectively. While the base from all business divisions was high compared to the previous year, F&C was particularly sluggish.
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For the second quarter, consolidated sales and operating profit excluding the logistics sector are expected to reach 4.7555 trillion KRW (3.5%) and 249.9 billion KRW (36.5%), respectively. It is anticipated that the burden of grain input costs will begin to ease somewhat starting in the second quarter. Considering the effect of price increases, the improvement in spreads is expected to become gradually visible. Overseas processing costs are being resolved relatively faster compared to domestic costs. Operating margin improvement is expected to continue. Bio is expected to recover from the second quarter, centered on nucleic acids, due to the full-scale reopening of China. F&C is also expected to recover compared to the previous quarter. Considering market conditions, a return to profitability is expected in the third quarter. Earnings growth is expected from the second half. Consolidated operating profit excluding logistics for the third and fourth quarters is expected to increase by 5.5% and 161.1%, respectively.
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