NH Securities: “CJ CheilJedang is doing well despite difficulties such as exchange rates”

NH Investment & Securities announced on the 11th that CJ CheilJedang [097950] is “doing well despite difficulties,” and that it maintains an investment opinion of “buy” and a target price of 260,000 won. The closing price of the battlefield is 177,600 won.

Researcher Joo Young-hoon explained in the report, “Starting from this quarter, the company changed the way it divides its business,” adding, “The existing food and bio business was subdivided into lifestyle food business (processed food), technology material business (bio), and core material business (bio and food ingredients for feed).”

He continued, "Among these, the key to future growth and valuation re-evaluation is the lifestyle food business, especially the overseas sales growth rate," and added, "This business is continuing to grow well in major overseas regions, centering on GSP (global strategic products)."

In particular, he evaluated it as positive that "despite the unfavorable exchange rate impact in the American market, which accounts for the largest portion, we continued to grow based on increased sales of Hetbahn through increased brand awareness and entry into key distribution channels."

Regarding the third quarter performance, "Consolidated sales and operating profit recorded KRW 7.3952 trillion and KRW 309 billion, respectively," and "A simple comparison with the same period last year is meaningless due to the sale of the F&C (feed and livestock) business division, but sales and operating profit excluding the F&C division and CJ Logistics increased by 5.7% and 6.9%, respectively, meeting the lowered market consensus (expected forecast)." explained.

He also pointed out, "Sales of the lifestyle food business recorded KRW 2.5744 trillion, a 3.8% increase compared to the same period last year, and the year-on-year growth rate of domestic and overseas businesses increased by 3.9% and 3.7%, respectively." He added, "Although sales growth in the Americas, which accounts for more than 80% of overseas business, slowed due to the strong won, good performance continued in all major regions due to increased GSP demand."

Researcher Joo added, "It is also encouraging that we succeeded in protecting profitability through top-line growth and cost efficiency despite the burden of rising raw materials and logistics costs." He added, "The technical materials business saw a significant increase in sales compared to the previous year due to increased sales of specialty products, but the deficit widened due to the impact of pre-execution of costs related to new businesses, while the core materials business was able to improve both sales and profits due to the growth of amino acid products for feed."