[Click eStock] "CJ Freshway, the Biggest Beneficiary of Dining-Out Demand Recovery"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained its buy rating on CJ Freshway on the 12th and raised the target price by 19% to 31,000 KRW.

CJ Freshway is expected to benefit as social distancing measures are eased, outdoor activities resume, and the number of operating days for dining establishments gradually returns to normal. Domestic dining demand in December last year and January this year was sluggish compared to the first COVID-19 outbreak, but it is estimated to have gradually rebounded from February compared to the previous month. Sales growth is expected to strengthen this month.

Sangjun Park, a researcher at Kiwoom Securities, explained, “The recovery in same-store sales growth of major offline retail companies, which were severely affected by the spread of COVID-19, is strengthening. Demand recovery is expected to be faster compared to Seoul and the metropolitan area, and as the number of operating days for restaurants and others normalizes overall, dining demand recovery will gradually strengthen.”

Following a period of staying indoors during winter, strong psychological momentum for resuming outdoor activities, seasonal demand increases, and expectations for vaccinations in the second half of the year are expected to drive a strong rebound in dining demand throughout this year. Researcher Sangjun Park stated, “Among food material distribution and group catering companies, CJ Freshway is the most sensitive to outdoor activity. It recorded the weakest sales growth last year. The impact was significant in dining franchises, general restaurants, concessions, and hospitals, but during the demand recovery phase, the improvement in performance is expected to be strong.”