[Click eStock] "CJ CheilJedang, Focus on Inherent Growth Potential"

Global Food and Environment & Energy Sector Growth Expected
Hana Financial Investment Maintains CJ CheilJedang Target Price at 620,000 KRW

[Asia Economy Reporter Gong Byung-sun] It has been observed that CJ CheilJedang is expected to increase its market share globally in the mid to long term, alongside its environmental and energy sectors. It is also anticipated to make a full-scale entry into the personalized health functional food market in the future.

On the 9th, Hana Financial Investment maintained its investment opinion of 'Buy' and a target stock price of 620,000 KRW for CJ CheilJedang. The closing price on the previous day was 370,000 KRW.

While maintaining its investment opinion and target price, Hana Financial Investment cited global food as a mid to long-term growth factor for CJ CheilJedang. Through synergy effects with 'Schwan's,' the company's business-to-consumer (B2C) store entry rate, which was 19.4% in 2019, is expected to rise to 60% by the end of this year. Among these, the market shares of key products such as pizza and dumplings are on an upward trend. The dumpling brand 'Bibigo' is also reported to have started entering major business-to-business (B2B) channels such as corporate catering.

Expansion into the environmental and energy sector, called 'White,' is also anticipated. CJ CheilJedang aims for mid to long-term growth through commercialization, including expanding the production capacity of biodegradable plastic material (PHA) to 300,000 tons by 2030. Researcher Shim Eun-joo of Hana Financial Investment explained, “Besides CJ CheilJedang, only two other companies are known to possess production technology,” and added, “The PHA market is expected to grow at an average annual rate of 56% over the next five years as restrictions on chemical plastic use expand.”

The company also plans to enter the health functional food market. Last month, CJ CheilJedang announced the spin-off of its health business division, and CJ Wellcare will be established next year. The health business division's sales are estimated to be around 100 billion KRW. Researcher Shim said, “The newly established CJ Wellcare plans to develop next-generation probiotics with added diet and immune functions,” and predicted, “It will also make a full-scale entry into the personalized health functional food market.”

Meanwhile, concerns related to performance are expected to be resolved next year. Hana Financial Investment estimated CJ CheilJedang's sales excluding logistics next year to increase by 4.4% from this year to 16.0382 trillion KRW, and operating profit to rise by 0.4% during the same period to 1.2767 trillion KRW. The possibility of price increases in domestic and overseas processed products is expected to have a positive impact on performance.