[Click e-Stock] "CJ Reaffirms Extremely Limited Downside Risk"

On September 8, Hana Securities raised its target price for CJ from 190,000 won to 210,000 won, stating that although the merger rumors with Olive Young ultimately ended as a non-event, it reaffirmed the company's limited downside risk. The investment opinion remains 'Buy'.

Previously, on September 5, reports emerged that CJ had begun a valuation process to determine the merger ratio with Olive Young, causing the stock price to surge by 11%. However, after the company announced that it had never considered a merger, the gains were fully reversed, but the stock ultimately closed up 6.1%. Choi Jungwook, a researcher at Hana Securities, viewed this extreme stock price volatility as a reflection of the market's interest in the possibility of a merger.

Researcher Choi stated, "The risk of an unfavorable merger ratio with Olive Young, which has been a discount factor for CJ's stock price, has been significantly reduced as the government decided to improve the system so that the actual value, in addition to the stock price, can be reflected in the valuation of listed companies during mergers and spin-offs." He added, "Even if a merger does not proceed immediately, the value of CJ's stake in Olive Young will continue to grow, as Olive Young's sales are expected to increase significantly with the approval of visa-free group tourist entries at the end of September."

In July, the number of Chinese tourists entering Korea reached 600,000, up 26.2% from 480,000 in June. Furthermore, with the approval of visa-free group tourist entries for Chinese nationals starting in September, Olive Young's foreign inbound sales are expected to increase substantially. Researcher Choi explained, "Despite opening 15 new directly operated stores in the second quarter, Olive Young's sales per store nearly reached 1.05 billion won in the second quarter, up from 900 million won in the first quarter." He added, "If the growth in Chinese tourist traffic is combined with a strategy focused on opening stores in global tourist districts and complex malls, the proportion of foreign inbound sales at offline stores could expand to 38-40% in the second half of the year."

Researcher Choi also analyzed that even from a conservative perspective, Olive Young's expected operating profit this year is highly likely to exceed 770 billion won. The estimated corporate value of Olive Young is 8.8 trillion won, and considering CJ's equity stake, the value of CJ's stake in Olive Young is estimated to reach approximately 4.5 trillion won.

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