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CJ CheilJedang headquarters (photo = CJ) |
[Alpha Biz= Reporter Kim Sangjin] On the 18th, SK Securities downgraded its target price for CJ (001040) from 140,000 KRW to 125,000 KRW, an 11% reduction, considering the drop in the stock prices of its subsidiaries. However, the firm maintained its "Buy" rating for CJ.
SK Securities explained that the target price was revised lower to reflect the decrease in the stock prices of key subsidiaries like CJ CheilJedang and CJ ENM. Despite this, the firm remains positive on CJ, citing strong performance from non-listed subsidiaries such as CJ Olive Young and CJ Foodville. The recent sale of CJ Olive Young's stake by Glenwood Private Equity is expected to lead to a positive impact on the company’s performance, with the likelihood of value from these subsidiaries transferring to the holding company.
For CJ's third-quarter results, SK Securities noted that the company’s revenue reached 10.8 trillion KRW, a 5.4% increase from the previous year, and operating profit increased by 35.3% to 674.8 billion KRW. Key listed subsidiaries, such as CJ CheilJedang (up 5.1%), CJ ENM (up 113.8%), and CJ CGV (up 5.1%), showed solid operating profits. In addition, CJ Olive Young’s revenue and net income grew by 23.4% and 21.7%, respectively, while CJ Foodville saw its revenue and net income rise by 6.0% and 31.7%.
However, due to the stock price declines of major subsidiaries like CJ CheilJedang (-36.1%) and CJ ENM (-31.9%) in the second half of the year, the discount to CJ's net asset value (NAV) has widened to 45%. Despite this, the strong results from CJ Olive Young and CJ Foodville have enhanced the valuation appeal, according to SK Securities.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
