[Click eStock] "CJ, Possibility of Olive Young Becoming a 100% Subsidiary"

DS Investment & Securities analyzed on the 17th that the current stock price of CJ is significantly undervalued, considering the possibility of incorporating K-Beauty absolute leader Olive Young as a 100% subsidiary. The investment opinion was maintained as 'Buy' with a target price of 180,000 KRW.

Earlier, CJ Olive Young announced on the 14th that it had decided to purchase an 11.3% stake held by Korea Beauty Pioneer in the form of treasury shares. Researcher Kim Su-hyun of DS Investment & Securities stated, "With all external shareholders exiting, Olive Young will now be composed of CJ holding 51.3%, related parties 25.5%, and treasury shares 22.6%," adding, "We foresee a higher possibility of a merger through a comprehensive stock swap with CJ rather than an IPO of Olive Young." He predicted that Olive Young's fair value would be evaluated at a minimum of 6 to 7 trillion KRW or more.

Researcher Kim pointed out three major changes after the extraordinary general meeting of CJ Olive Young in December last year: ▲ transfer of 250 billion KRW in capital reserves to retained earnings ▲ addition of logistics and transportation services to the business scope in the articles of incorporation ▲ purchase of a 680 billion KRW-scale office building on prime land in Yongsan. Kim explained, "If all treasury shares are canceled, the stock value will increase, and the addition of business content and office building purchase will lead to an enhancement of Olive Young's earnings and asset value." Considering that CJ could make Olive Young a 100% subsidiary or operate it like a business holding company, he diagnosed that the current stock price is significantly undervalued.