CJ CheilJedang, the largest sales in the first quarter, rising alone… Early trading 4.6% ↑ despite KOSPI weakness
CJ CheilJedang achieved the highest quarterly sales. Compared to the same period of the previous year, sales increased by 17.6% and operating profit by 6.6%, exceeding the consensus (market average forecast), respectively. The brisk bio business and food business are considered to be the driving factors for earnings.
In the first quarter of the bio business division, sales increased 39.3% year-on-year to KRW 1.82.8 trillion, and operating profit increased by 128% to KRW 175.8 billion. In CJ CheilJedang’s bio business, the Green Biotech sector, which produces various useful substances by utilizing the functions and information of living organisms, led the performance.
CJ CheilJedang focuses on amino acids for animal feed and food seasonings, which are representative examples of green bio. Due to the recent rise in feed prices, the price competitiveness of ‘lysine’, an amino acid for animal feed, as an alternative to feed, has increased. An official from CJ CheilJedang said, “Based on cutting-edge compatible production technology and excellent location across the globe, including the United States, China, Southeast Asia, and South America, we have further strengthened our position in the market, and stable profitability has been achieved through the expansion of high-margin specialties and long-term contracts centered on large customers. secured,” he explained.
In the case of the food sector, sales of KRW 2.609.5 trillion increased by 13.1% compared to the same period of the previous year. In particular, overseas exports account for 45% of total food sales. CJ CheilJedang secured a stable distribution network by acquiring Schwans Company, a US frozen food company last year. Since then, overseas processed food sales have grown by 36% in Europe, 31% in Japan, and 14% in the US compared to the same period last year, showing double-digit growth. In the US, grocery dumplings and processed rice (P-Rice) sales increased 71% and 66%. However, food operating profit decreased by about 4% compared to the previous year. This is interpreted as an increase in the cost burden caused by the rise in raw and subsidiary material prices and the effect of global inflation.
CJ CheilJedang’s share price is showing an upward trend despite the weak KOSPI. As of 11 am on the 10th, CJ CheilJedang is trading at 339,500 won, up 4.24% from the previous day. Securities firms also raised their target price at once. Kiwoom Securities raised its target price for CJ CheilJedang by 5.7% from 530,000 won to 560,000 won. In addition, securities firms such as KB Securities (470,000 won → 500,000 won), Cape Investment & Securities (500,000 won → 550,000 won), and DS Investment & Securities (460,000 → 490,000 won) also raised their target prices.
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