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View of CJ CheilJedang Headquarters (Photo: CJ) |
[Alpha Biz= Reporter Kim Sangjin] On the 13th, Hanwha Investment & Securities lowered its target price for CJ CheilJedang (097950) from 470,000 KRW to 440,000 KRW, citing weak performance in the company's domestic food business.
In a report, analyst Kang Eun-ji explained that the slowdown in processed food demand and the poor performance of the dining-out market limited revenue growth, leading to a deterioration in profitability. Kang also noted that increased marketing expenditures are expected due to prolonged weak demand for domestic processed foods.
For the third quarter of this year, CJ CheilJedang's revenue reached 7.4143 trillion KRW, with operating profit of 416.2 billion KRW, both falling short of market expectations.
As consumer sentiment continues to weaken, annual performance is expected to be worse than previously anticipated. Along with Hanwha Investment & Securities, other firms such as iM Securities (47,000 → 43,000 KRW), Kiwoom Securities (42,000 → 38,000 KRW), and Shinhan Investment & Securities (46,000 → 37,000 KRW) also lowered their target prices for CJ CheilJedang.
However, Kang remained positive on the outlook for the company's overseas food business. "In North America, despite intensified competition in key products, CJ CheilJedang continues to hold the top market share and maintains volume-based growth," Kang said. "Additionally, sales in newly entered markets like Australia and Europe are steadily increasing. Notably, in Australia, the company has started supplying products to Coles, the second-largest retailer after Woolworths."
Kang further mentioned that the company is growing in new B2B channels, such as in-flight meals. "The base effect from the sale of the Chinese subsidiary ‘Jishangju’ will be eliminated starting in the fourth quarter, which is also a positive factor," the analyst added.
Despite the domestic challenges, Kang maintained a 'Buy' rating for CJ CheilJedang.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
