Yuanta Securities Korea said on the 1st that because the government is moving to restrict dual listings, the value of CJ Olive Young is expected to be fully reflected in CJ's share price. It reinstated coverage with a "Buy" rating and a target price of 250,000 won. CJ's previous trading day share price was 189,000 won.
Lee Seung-ung, an analyst at Yuanta Securities Korea, said, "The value of CJ Olive Young is expected to be fully reflected in CJ's share price," and noted, "As the government recently moves to restrict dual listings, CJ, which owns a strong unlisted subsidiary, is expected to benefit."
As a pure holding company, CJ is critically affected in corporate value by its subsidiaries' earnings and equity value. In particular, key unlisted subsidiary CJ Olive Young accounts for 74% of CJ's subsidiary equity value, with a 30% share of operating profit.
CJ Olive Young's earnings growth is also expected to continue. Last year, CJ Olive Young's revenue rose 21.8% on-year to 5.8 trillion won, and operating profit increased 24.3% to 744.7 billion won.
Online revenue also grew rapidly. Online revenue increased 32.1% from a year earlier to 1.8 trillion won, pushing its share of total sales above 30%.
The analyst said, "With tensions in China-Japan relations, arrivals of Japanese tourists and Chinese tourists are increasing, so foreigner-driven sales growth will continue," adding, "Global expansion will also get into full swing this year."
CJ Olive Young plans to establish logistics hubs in North America and gradually increase openings of local offline stores starting in the second quarter this year.
The analyst also projected, "An expansion of shareholder returns is expected in line with profit growth at key subsidiary CJ Olive Young."