[Click eStock] "CJ, Expecting Performance Improvement Across All Affiliates... Target Price Up"

Target Price Raised by 11.1% Compared to Previous Level

Daishin Securities on the 25th raised the target price for CJ from the previous 135,000 KRW to 150,000 KRW, anticipating an increase in net asset value (NAV) through improved performance across all affiliates this year. The investment rating was maintained as 'Buy.'

Ji-hwan Yang, a researcher at Daishin Securities, explained, "The target price increase reflects the rise in equity value of CJ's unlisted subsidiaries CJ Olive Young, CJ Networks, and CJ Foodville. In 2023, the separate net income of CJ's three unlisted companies is expected to be 347.3 billion KRW for Olive Young, 36.1 billion KRW for Networks, and 35.8 billion KRW for Foodville, representing increases of 66.9%, 32.2%, and 25.6% respectively compared to the previous year, with significant improvement in profitability. Accordingly, the estimated enterprise value of Olive Young was raised to 5.2 trillion KRW, Networks to 360 billion KRW, and Foodville to 358 billion KRW. Considering CJ's shareholding ratios in each company, the equity value of the three unlisted subsidiaries is estimated at 3.37 trillion KRW," he said.

The key driver of CJ's stock price rise, CJ Olive Young, posted last year's results with sales of 3.8612 trillion KRW, operating profit of 466 billion KRW, and net income of 347.3 billion KRW. These figures represent increases of 38.0%, 69.8%, and 66.9% respectively compared to the previous year. Researcher Yang stated, "At the end of last year, the number of offline stores reached 1,338 (1,112 directly operated, 226 franchises), an increase of 40 stores compared to the end of 2022, contributing to external growth, and online sales growth continues through the advancement of Today Dream. Considering CJ Olive Young's high growth and profitability improvement, we raised its enterprise value from the previous 4.8 trillion KRW to 5.2 trillion KRW. The expected enterprise value upon an initial public offering (IPO) or merger with CJ is projected to significantly exceed this estimate," he said. He added, "As Olive Young's value grows, CJ Group's succession and governance structure will become more solid."

Not only unlisted companies but also listed companies are expected to improve their performance this year. Researcher Yang said, "Based on consensus (average securities firm forecasts), the performance of the four listed subsidiaries is also expected to improve this year. The consensus net income for this year for the listed subsidiaries is expected to increase by 43% for CJ CheilJedang, 15% for CJ Freshway, and CJ ENM and CJ CGV are expected to return to profitability," he said.