"CJ CheilJedang's Earnings Concerns Already Priced In; Further Downside Limited"

[Financial News] NH Investment & Securities said on the 6th that concerns over CJ CheilJedang's earnings had already been priced into the stock. The brokerage maintained its "Buy" rating and target price of KRW 260,000.
Joo Young-hoon, an analyst at NH Investment & Securities, said, "The sale of the F&C business has eased the complexity of the business structure, which had weighed on the company's valuation." He added, "The food-focused business portfolio is being strengthened, and it is also positive that overseas business revenue is expanding around global strategic products (GSP)."
He continued, "Although revenue growth has been solid, it is regrettable that company-wide earnings have yet to improve as the burden of rising costs caused by external factors such as war has increased." He added, "Considering the valuation, concerns over this year's earnings appear to have already been priced into the stock, so the potential for further share-price declines is likely to be limited."
Third- and fourth-quarter consolidated revenue and operating profit were projected at KRW 7.5239 trillion and KRW 316 billion, respectively. Excluding the F&C business segment and CJ Logistics, revenue and operating profit were expected to increase 7.4% and 7.0% year over year, respectively, but to come in slightly below the market consensus.
Joo said, "Food division revenue is expected to grow more slowly than previously estimated because of weaker domestic consumer sentiment and the impact of the stronger won on overseas food business revenue." He added, "As pressure from rising costs persists, a significant rebound in operating profit remains unlikely."
He also forecast, "Although the bio division is likewise facing negative currency effects, it is expected to continue achieving double-digit revenue growth year over year without difficulty." He added, "Profitability will decline quarter over quarter due to factors driving costs higher, but considering the base effect, it is expected to increase significantly compared with the same period a year earlier."
[email protected] Seo Min-ji Reporter