[Click eStock] "CJ Freshway, Overcoming Industry Slump with Strong Group Meal Performance"

IBK Investment & Securities expects CJ Freshway's operating profit to increase despite the overall downturn in the foodservice industry. The firm maintained its 'Buy' rating and target price of 48,000 KRW.

Nam Seong-hyun, a researcher at IBK Investment & Securities, stated on the 5th, "Although the fourth-quarter earnings are expected to fall short of expectations, we view the outlook positively," adding, "Despite the sluggish business environment, operating profit growth seems achievable due to eased logistics cost burdens, continued expansion of group meal service market share, and the anticipated resumption of growth in the raw materials division." The consolidated sales for Q4 2023 are projected at 765.4 billion KRW, with operating profit at 24.4 billion KRW, representing increases of 7.7% and 40.2% respectively compared to the same period last year.

Despite the sharp decline in consumer spending leading to a downturn in the foodservice sector, CJ Freshway is evaluated to have performed well by recording strong results in group meal services. This success is attributed to ▲ increased order volumes ▲ effects of price hikes ▲ stabilization of raw material prices ▲ increased meal consumption due to economic slowdown. The order environment is also positive, as the business environment improves with orders from other large companies coming in. CJ Freshway's group meal service sales were estimated at 731.1 billion KRW last year, a 25% increase from 583.8 billion KRW in 2022. This is the highest sales growth rate among its major business segments.

Researcher Nam said, "Compared to the pre-COVID period, CJ Freshway's business portfolio has shifted to a considerably more stable structure," explaining, "Despite increased fixed costs from new investments, annual profit growth was achieved, and ongoing demarketing efforts have led to margin improvements and reduced risks from bad debts." Although the foodservice industry is likely to remain challenging through the first half of this year, considering CJ Freshway's current business status, growth momentum is expected to continue.

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