[Click eStock] "CJ Freshway Demonstrates Competence... Q3 Earnings Improvement to Continue"

[Asia Economy Reporter Myunghwan Lee] Kiwoom Securities announced on the 11th that it maintains a buy rating on CJ Freshway and has raised the target price from the previous 56,000 KRW to 60,000 KRW. This is due to the expectation that CJ Freshway's performance will continue to improve this year.

CJ Freshway's consolidated operating profit for the second quarter of this year recorded 34.6 billion KRW, an 82% increase compared to the same period last year, surpassing market expectations. Kiwoom Securities analyzed that since the social distancing measures were lifted in April, both sales and operating profit significantly exceeded market expectations due to stronger-than-expected dining-out demand and an increase in new clients.

Looking at each segment, food ingredient distribution sales grew by 26% compared to the same period last year, supported by the recovery in dining-out demand and an increase in new clients in the catering channel. Group catering sales increased by 24.5% due to new orders, increased users, and strong performance in leisure and concession sectors. The operating profit margin recorded 4.8%, reflecting strong sales in each segment and improved gross profit margin (GPM) in the channels, marking the highest quarterly operating profit in history.

Kiwoom Securities expects CJ Freshway's third-quarter performance this year to improve further compared to the second quarter. Despite recent market concerns over the resurgence of COVID-19, the strong trend in dining-out demand is expected to continue. In particular, the growth in dining-out and catering distribution channels and group catering sales is expected to highlight the company's mid- to long-term growth potential.

Researcher Sangjun Park of Kiwoom Securities stated, "The recovery in dining-out and catering demand following the lifting of social distancing and the expansion of new client orders will continue to drive performance improvement."