Park Sangjun, a researcher at Kiwoom Securities, said, "CJ's consolidated operating profit for the first quarter fell somewhat short of market expectations due to weak domestic consumer sentiment. However, with the recent easing of political uncertainty, the Korean Consumer Sentiment Index has surpassed the baseline, and the sales growth of the key unlisted subsidiaries Olive Young and Foodville remains robust. Therefore, the medium- to long-term outlook for the company is still considered positive."
In the case of Olive Young, overall sales growth is expected to remain strong, driven by the recent increase in inbound travelers and expectations of a rise in group tourists from China in the second half of the year. In April, sales increased by 17% year-on-year, which is a 3 percentage point improvement compared to the 14% year-on-year sales growth recorded in the first quarter of this year.
Foodville is benefiting from expectations regarding the expansion of Tous Les Jours stores in the United States. Park noted, "Since the company plans to complete its Georgia plant this year and open more than 80 stores in the U.S. alone, there is no need for significant concern about the slowdown in net store growth in the first quarter. While there may be a short-term burden from investment costs aimed at expanding the business, in the medium to long term, the proportion of the highly profitable U.S. bakery business is expected to increase, leading to improvements in both sales growth and profit growth."
Park maintained a "Buy" investment rating on CJ and set a target price of 175,000 won. He explained, "As the solid growth of Olive Young and Foodville continues, combined with the recovery of domestic consumer sentiment and expectations for improved financial structure at CheilJedang, expectations for an increase in the overall corporate value of CJ are likely to persist."
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