NICE Investors Service rates CJ OliveNetworks 'A+'; monitors burden from JoongAng Ilbo acquisition [fn Market Watch]

[Financial News] NICE Investors Service said on the 22nd that it would assign CJ OliveNetworks a new long-term credit rating of A+. It assigned a stable outlook.
Yuk Seong-hun, a researcher at NICE Investors Service, said, "CJ OliveNetworks continues to grow revenue through stable demand from affiliates and a diversified external customer base."
CJ OliveNetworks is a systems integration (SI) specialist within CJ Group and has secured a stable revenue base centered on its affiliates. Since 2022, revenue from affiliates has remained around 500 billion won a year. In particular, revenue grew by an average of 9.4% annually from 2021 to 2025. Over the same period, external revenue increased by an average of 18.4% annually, driving growth in the company's scale.
Researcher Yuk said, "The company is achieving solid operating profitability based on its affiliate revenue base and diversified business portfolio."
Its financial stability is also strong. As of the end of June this year, its debt ratio stood at 95.4% and its net debt dependence ratio at -41.4%. Net debt was -336.9 billion won, leaving the company with a net cash position. Excluding lease liabilities, it is effectively debt-free, with no borrowings.
However, volatility in its financial structure stemming from group-level decisions was identified as a key risk factor. CJ OliveNetworks issued 200 billion won in redeemable preferred shares (RPS) last December and repaid 60 billion won of them in July this year. It is also considering repaying the remaining 140 billion won by the end of the year.
NICE Investors Service projected that fully redeeming the preferred shares would cause the debt ratio to rise to the level seen in 2024. Potential funding needs for investment in tangible assets and equity stakes, as well as for dividends, were also cited as factors that could add to the financial burden.
The agency also identified the possibility of support from affiliates related to the planned acquisition of JoongAng Ilbo as an area to watch. As of the end of June this year, CJ OliveNetworks held a 9.2% stake in JoongAng Ilbo. After the Daou Kiwoom-CJ consortium was selected as the preferred bidder for the acquisition on the 19th, questions arose over how the eventual transaction structure could affect the financial burden.
Yuk said, "If the acquisition of JoongAng Ilbo actually goes ahead, there could be a support burden depending on group-level decisions."
However, as a sub-subsidiary within CJ Group's holding-company structure, CJ OliveNetworks is subject to restrictions under the Fair Trade Act on holding shares in affiliates. NICE Investors Service viewed this as a factor that limits potential investment burdens.
NICE Investors Service plans to review revenue size and profitability, the debt ratio, and the amount of net debt as key factors that could affect the credit rating. It will also continue to monitor progress toward finalizing the transaction structure for the JoongAng Ilbo acquisition and any resulting changes in the financial burden.
[email protected] Kim Hyun-jung Reporter