[Click eStock] "CJ CheilJedang Focused on Eco-Friendly Management, Targeting the 'White Bio Era'"

Rapid Establishment of Biodegradable Plastic Production System
Fast Market Expansion Expected in the Future

[Asia Economy Reporter Minwoo Lee] CJ CheilJedang is focusing on environmentally friendly management and exploring new growth engines by establishing a production system for biodegradable plastics based on PHA.

On the 16th, NH Investment & Securities maintained CJ CheilJedang as the top pick in the industry with a 'buy' rating and a target price of 600,000 KRW. The closing price the previous day was 429,000 KRW. This is based on the company's efforts toward environmentally friendly management in its existing business and its expansion into related new fields. In particular, it is evaluated that by entering the biodegradable plastics market through the establishment of a production system for PHA, an eco-friendly bioplastic material that biodegrades in marine environments, the company has secured a new growth engine.

It is also positive that the company has secured differentiated strain development and fermentation process production capabilities through its existing bio-industry. Jomijin, a researcher at NH Investment & Securities, explained, "As a comprehensive food company, CJ CheilJedang has the advantage of a virtuous cycle structure by applying the biodegradable plastic (PHA) it produces to its own products or providing guidance on the use of eco-friendly plastics to other food companies." She added, "PHA began full-scale production after 2022 and has already secured pre-orders of 5,000 tons."

The biodegradable plastics market is expected to grow rapidly due to strengthened environmental regulations. The issue of plastic disposal has been highlighted as delivery and packaging surged due to social distancing measures and restaurant operating hour restrictions caused by COVID-19. Conventional petroleum-based plastics cause environmental pollution and destruction during production, processing, and disposal stages. Since many products are difficult to recycle, interest in biodegradable plastics is rapidly increasing from the perspectives of environmental friendliness and resource circulation.

Biodegradable plastics do not use any conventional plastics and can be decomposed by microorganisms such as bacteria, algae, and fungi. They are 100% decomposed, producing only natural byproducts such as carbon dioxide, methane, water, and biomass. Although their share in the overall plastics market is still only 1-5%, they are growing rapidly every year.

Researcher Jo said, "In particular, the European Union (EU) introduced a Plastic Tax starting this year, and China has been gradually restricting the use of general single-use plastics since the end of last year, making the adoption of eco-friendly plastics essential." She predicted, "The biodegradable plastics market is expected to accelerate growth with government regulatory support."