"CJ Freshway Faces Inevitable Costs to Drive Online Growth; Target Price Lowered"

[Financial News] Hyundai Motor Securities said CJ Freshway will inevitably face higher costs as it seeks to gain an early lead in the online market. The brokerage maintained its “Buy” rating but lowered its target price from KRW 41,000 to KRW 34,000.
Ha Hee-ji, a researcher at Hyundai Motor Securities, said on the 11th, "CJ Freshway posted second-quarter sales of KRW 923.2 billion and operating profit of KRW 23.5 billion, up 4.5% and down 14.2%, respectively, from a year earlier." She added, "It is positive that sales from the online segment, Sikbom, within the food ingredients distribution business rose 51% year on year to KRW 52.1 billion."
However, the online segment was considered somewhat disappointing in terms of profitability. Ha said, "It swung to a loss because of higher short-term costs to gain an early lead in the online market and one-off expenses related to the incorporation of Market Robo."
As investment costs for online growth are expected to continue in the second half of the year, analysts forecast that a short-term adjustment to earnings expectations will be unavoidable. However, the company’s medium- to long-term growth trajectory remains valid.
Ha forecast, "Online growth is expected to accelerate further in the second half of the year. However, investment costs to support that growth are also expected to continue." She added, "The medium- to long-term growth trajectory driven by accelerating online growth and the integration of Fresh One remains valid."

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