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[Alpha Biz= Paul Lee] On June 27, Hana Securities reiterated its “Buy” rating on CJ CheilJedang, maintaining a target price of KRW 380,000, noting that while near-term earnings may remain sluggish, a recovery is expected in the second half of 2024.
The brokerage estimates CJ CheilJedang’s consolidated operating profit for Q2 at KRW 366.2 billion, down 4.5% year-on-year, with sales projected to increase 1.5% to KRW 7.34 trillion.
The company’s food division is expected to remain under pressure due to weak domestic consumption. However, the bio division is projected to partially offset this with stable pricing in major amino acid products.
Hana Securities also forecasts a roughly 3% year-on-year decline in domestic processed food sales, citing persistent weakness in offline retail channels and declining operating margins.
On the other hand, overseas processed food sales are expected to post flat or slightly positive growth, with strong double-digit sales increases in Europe and Australia continuing outside of the U.S. market.
CJ CheilJedang’s full-year earnings are expected to follow a “low-to-high” trajectory, with profit improvement anticipated in the second half. The company is focusing on SKU rationalization in the domestic market to defend profitability, while overseas operations are expected to benefit from the normalization of dessert production lines in the U.S. and continued high growth in Europe and Australia.
Hana Securities concluded that, despite short-term headwinds, CJ CheilJedang remains well-positioned for a rebound in the latter half of the year.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
