[Click eStock] "CJ CheilJedang, Strong Performance Expected in Q3 Again"

KB Securities Presents Investment Opinion 'Buy' and Target Price of 520,000 Won... Closing Price on 25th at 390,000 Won

[Asia Economy Reporter Kum Boryeong] CJ CheilJedang is expected to record strong performance in the third quarter.

According to KB Securities on the 28th, CJ CheilJedang's consolidated third-quarter earnings are estimated at KRW 6.3303 trillion in sales and KRW 403.5 billion in operating profit. These figures represent increases of 8.1% and 48% respectively compared to the previous year. Excluding CJ Logistics, sales and operating profit are expected to rise by 8.2% and 70.8% year-on-year to KRW 3.7301 trillion and KRW 309.1 billion, respectively.

In particular, the food division is expected to see strong sales of processed foods as the non-face-to-face (untact) consumption trend has grown since the COVID-19 pandemic. With the resurgence of COVID-19 domestically and internationally, demand for home meals is increasing, leading to growth not only in home meal replacements (HMR) but also in seasoning categories such as Dasida and sauces.

Lee Seonhwa, a researcher at KB Securities, analyzed, "Chuseok gift set sales are expected to reach about KRW 160 billion, with the food division’s sales increasing by 10.9% and operating profit rising by 39.5% compared to the previous year."

The bio division is likely to defend against price declines of major products as specialty products such as tryptophan and valine, which generate high profits, continue to grow steadily. KB Securities forecasts that the bio division’s sales and operating profit will grow by 1.2% and 37.5% year-on-year, respectively.

Next year, a full-scale expansion of Bibigo’s distribution network in the North American market is also anticipated. The researcher stated, "CJ CheilJedang and Schwan’s plan to integrate and manage the B2C distribution network in North America starting next month. In the second quarter, frozen dumplings in the U.S. grew by 40% year-on-year, mainly sold through club channels like Costco. With the integration of distribution networks, the Bibigo brand is expected to expand into grocery channels such as Walmart, leading to significant channel expansion. The burden from the 2021 low base can be alleviated through global channel expansion and a profitability-focused growth strategy."

KB Securities has given CJ CheilJedang a 'Buy' investment rating with a target price of KRW 520,000. The closing price on the 25th was KRW 390,000.