[Click eStock] "CJ CheilJedang, Non-Food Division Turnaround Expected to Accelerate"

On the 18th, NH Investment & Securities maintained a target price of 430,000 KRW and a buy rating for CJ CheilJedang, stating that a full-scale earnings turnaround is expected to begin.

Joo Young-hoon, a researcher at NH Investment & Securities, forecasted, "While the domestic processed food demand growth trend continues, a turnaround in the non-food sector will be fully underway."

In particular, the bio sector is expected to see an upward revision in earnings estimates if the market conditions for core products recover and the ongoing sale of the subsidiary CJ Selecta is completed.

The current stock price is attractive in terms of valuation, trading at a PER of less than 10 times. Last year, concerns over earnings uncertainty in the bio and F&C business divisions acted as a burden on the stock price, so the turnaround in the non-food business is judged to have a positive effect on both CJ CheilJedang's consolidated earnings and valuation.

For the first quarter on a consolidated basis, sales and operating profit are projected at 7.281 trillion KRW and 372.3 billion KRW, respectively. Excluding the subsidiary CJ Logistics' performance, sales are expected to be similar to the same period last year, while operating profit is expected to increase by 67%.

Sales in the food division are estimated at 2.7742 trillion KRW. Domestic processed food demand is expected to show a slight recovery. Although overseas business will be affected by sales decline due to the divestment of Zhongsu, the main market, the United States, continues its growth trend.

In the bio sector, operating profit is expected to improve compared to the same period last year as market conditions for core products recover. The F&C division is expected to significantly reduce its deficit compared to the previous quarter due to rising pork prices in Vietnam.