[Click eStock] "CJ CheilJedang's Strong Performance Expected to Continue in Q3"

Hana Financial Investment Issues 'Buy' Rating and 620,000 KRW Target Price... Closing Price on 11th at 443,500 KRW

Bibigo by CJ CheilJedang (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] CJ CheilJedang posted strong second-quarter earnings, and analysis suggests this trend will continue into the third quarter.

According to Hana Financial Investment on the 12th, CJ CheilJedang's consolidated second-quarter results showed an operating profit of 384.9 billion KRW and sales of 5.9209 trillion KRW, representing increases of 119.5% and 7.4% year-on-year, respectively.

Excluding logistics, operating profit was 301.6 billion KRW and sales were 3.4608 trillion KRW, marking growth of 186.1% and 8.6% compared to the previous year. In particular, overseas processed foods and bio operating profits improved significantly year-on-year, contributing to overall profit enhancement.

The processed foods segment saw an increase in the utilization rate of the Jincheon plant due to expanded demand for Home Meal Replacement (HMR). Thanks to strong overseas sales, operating profit and sales increased by 209.4% and 14.7% year-on-year, respectively. The bio segment's operating profit and sales also rose by 87% and 0.1%, respectively, compared to the previous year, with improved profitability driven by price hikes of key amino acids (lysine, methionine) and an increased sales proportion of high-margin products (valine, arginine, etc.).

Strong performance is expected to continue into the third quarter. Eunju Shim, a researcher at Hana Financial Investment, stated, "We estimate third-quarter consolidated operating profit at 360.9 billion KRW and sales at 6.2329 trillion KRW, representing increases of 32.3% and 6.4% year-on-year, respectively." She added, "The overseas portion of food sales rose to 48% in the second quarter, and margin improvement is accelerating, which is positive. The bio segment's profit visibility is higher than ever due to expanded sales of high-margin products." She further noted, "In the feed segment, with Vietnam's pork price expected to remain above 60,000 VND in the third quarter, significant profit improvement compared to the previous year is anticipated."

Hana Financial Investment gave CJ CheilJedang a 'Buy' rating with a target price of 620,000 KRW. The closing price on the 11th was 443,500 KRW.