[Click eStock] "CJ, Olive Young's Strong Performance Growth Continues...Buy"

Target Price Set at 157,000 KRW

On May 28, Yuanta Securities initiated coverage on CJ with a 'Buy' investment rating and a target price of 157,000 KRW, citing the continued strong performance growth of its unlisted subsidiary, CJ Olive Young.

Lee Seungwoong, a researcher at Yuanta Securities, stated, "CJ Olive Young continues to show strong performance growth," and explained, "We believe the value of CJ Olive Young will be fully reflected, which supports the potential for an upward trend in CJ's share price."

For the first quarter of this year, CJ posted consolidated revenue of 10.6 trillion KRW, up 1.6% year-on-year, while operating profit declined by 7.2% to 535 billion KRW. Lee analyzed, "Operating profit decreased as the profits of listed subsidiaries such as CJ CheilJedang, CJ Logistics, CJ ENM, and CJ CGV were generally sluggish."

The unlisted subsidiaries, CJ Olive Young and CJ Foodville, are expected to maintain solid external growth. Lee said, "In the first quarter, CJ Olive Young achieved strong growth with revenue increasing by 14.4% to 1.2 trillion KRW and net profit rising by 19.3% to 126.3 billion KRW. Offline sales grew by 15%, driven by large stores in tourist districts and a sustained increase in foreign customer sales that outpaced the growth in the number of foreign visitors. Online sales also increased by 14%, maintaining a 28.9% share of total revenue." CJ Foodville recorded revenue growth of 5.6% to 229.8 billion KRW, while net profit decreased by 12.8% to 8.2 billion KRW. Lee added, "At the end of the first quarter, the number of Tous Les Jours stores in North America reached 155 (108 at the end of 2023, 150 at the end of 2024), continuing its expansion trend. With the completion of a local dough plant scheduled for the end of this year, the expansion of North American stores is expected to continue over the medium to long term."