[Click eStock] "CJ CheilJedang, Profitability Deteriorates... Target Price Down"

Domestic Food Industry Slump
Marketing Expense Increase Unavoidable

On the 13th, Korea Investment & Securities evaluated that CJ CheilJedang's profitability deteriorated due to sluggishness in the domestic food business. Accordingly, they maintained a 'Buy' investment rating but lowered the target stock price to 440,000 KRW.

Researcher Eunji Kang of Korea Investment & Securities stated, "The third-quarter sales recorded 7.4143 trillion KRW, a slight decrease compared to the previous year, and operating profit increased by 5.1% to 416.2 billion KRW, both falling short of consensus estimates by 2.1% and 3.3%, respectively."

The reason the third-quarter results fell short of estimates is the sluggish domestic food business. Researcher Kang explained, "The domestic food business experienced profitability deterioration because, despite increased marketing expenses due to weakened demand for processed foods and a sluggish dining-out market, sales growth was limited." It is assessed that, for the time being, expanded marketing expenses are inevitable due to weak demand for domestic processed foods.

However, Researcher Kang added, "From the fourth quarter, the effect of resuming transactions with Coupang is expected to be gradually reflected, leading to increased sales in online channels." She also noted, "Meanwhile, the overseas food business, centered on advanced countries such as the Americas and Europe with higher average selling prices (ASP), is expected to continue its growth trend."