[Click eStock] "CJ CheilJedang Secures Mid- to Long-Term Growth Engine Through PHA Business"

KB Securities Report

[Asia Economy Reporter Minji Lee] On the 24th, KB Securities maintained a Buy rating and a target price of 620,000 KRW for CJ CheilJedang, stating that the company secured mid- to long-term growth drivers by constructing a PHA production base in Indonesia.

CJ CheilJedang plans to complete a factory with an annual production capacity of 5,000 tons in Pasuruan, Indonesia, by the end of this year, using a low-investment PHA production method to enter the white bio new business sector within its bio division. After pilot production and customer mass production evaluations, full-scale mass production is expected to commence in the first half of next year. KB Securities analyst Sunhwa Lee said, “The PHA produced by the company has obtained four of the most prestigious European biodegradable certifications,” adding, “It is attracting attention as a PHA that combines the strong physical properties of aPHA with the excellent biodegradability of scPHA, offering both durability and eco-friendliness.”

The PHA plant’s production capacity ranks third worldwide. CJ CheilJedang plans to expand its PHA production capacity to 65,000 tons by 2025 and 300,000 tons by 2030. Currently, companies with commercial-scale PHA production capacity include only Danimer in the U.S. and KANEKA in Japan. Analyst Sunhwa Lee explained, “Cost competitiveness, including securing microbial strains and biomass raw material purchasing power, is a core technology, making the entry barrier high.”

As of 2018, 89 countries worldwide have implemented policies restricting the use of plastic bags, and South Korea has also applied strengthened regulations on disposable cups and plastic bags. Europe is expanding regulations on single-use plastics, and plastic regulation policies are being strengthened globally.

Analyst Sunhwa Lee stated, “Major consumer goods companies are aiming to reduce plastic use, and demand for biodegradable white bio plastics is continuously increasing,” adding, “Major companies that have signed PHA supply contracts with CJ CheilJedang include Helian Polymers, a Dutch 3D printer material company, with supply contracts exceeding 30,000 tons already concluded.”