Overview of CJ CheilJedang headquarters. /Courtesy of CJ CheilJedang

Korea Investment & Securities noted on the 15th that CJ CheilJedang experienced an increase in processed food sales due to the resumption of transactions with Coupang and the early sale of gift sets, but sales of materials decreased due to sluggish dining out business. Accordingly, the investment opinion maintains a "buy" rating, but the target price has been revised down from 440,000 won to 370,000 won. The closing price of CJ CheilJedang on the previous trading day was 242,000 won.

Korea Investment & Securities forecasts that CJ CheilJedang's sales for the fourth quarter of last year will reach 7.5044 trillion won, with an operating profit of 365.6 billion won. These figures are 0.6% and 7.5% below market expectations, respectively. Excluding CJ Logistics, the estimated figures are 4.4685 trillion won in sales and 219.8 billion won in operating profit.

Eun-ji Kang, a researcher at Korea Investment & Securities, said, "We estimate that the sales of the food division will be 2.8427 trillion won and operating profit will be 136.4 billion won." She added, "Although the sales of materials have decreased due to sluggish dining out business, the overseas food business is expected to see an increase in sales due to the resolution of the base related to the sale of field mice and growth in high-margin countries such as Australia and Europe."

However, the performance of the bio division for the fourth quarter of last year is anticipated to be 1.0538 trillion won in sales and 68.2 billion won in operating profit. Researcher Kang stated, "Despite intensified market competition for certain amino acid products, the Selektar market conditions have improved, leading to an increase in operating profit." She noted, "Even during the peak season for Feed & Care, the increase in Vietnamese pork prices was limited, and the decline in grain prices led to a decrease in feed sales, but there will be a continuation of positive performance due to the recovery of the global livestock market."

Researcher Kang commented, "We have revised down our earnings estimates in reflection of the sluggish conditions in the domestic food industry and have taken into account the decline in valuations of global competitors." However, she added, "There is no change in the expected gradual improvement in profitability of the food division, driven by the increase in sales to advanced countries, and the recovery of performance in the bio division and Feed & Care due to the recovery of the livestock market."