The target price of CJ has risen. Profitability of major subsidiaries is expected to improve.
Hi Investment & Securities raised its CJ target price from 123,000 won on the 20th. Investment opinion remained on the 'buy'.
Hi Investment & Securities said, "This year will be a year to improve profitability," adding, "The profitability improvement of its major unlisted subsidiaries CJ Olive Young and CJ Foodville will become visible, which will serve as a driving force for stock prices.".
The health & beauty (H&B) market, which has grown steadily for more than a decade, has begun to restructure overall due to the slowing growth of COVID-19. As a result, Olive Young, which has a 50% market share, is expected to set up a solo system and start improving profitability in earnest.
COVID-19 is expected to contribute to improving profitability as CJ Olive Young's online sales increase. The proportion of online sales rose from 10.6% in 2019 to 17.9% in 2020 and 23.4% in the first quarter of 2021.
CJ Foodville is also expected to turn into a surplus in 2021. The number of CJ Foodville stores decreased from 2,558 in the first quarter of 2019 to 1,525 at the end of 2020.
In particular, the number of direct management stores decreased from 230 to 92 during the same period, significantly reducing fixed costs.
CJ posted consolidated sales of 8.117 trillion won and operating profit of 447.5 billion won in the first quarter. Compared to the first quarter of 2020, sales and operating profit increased 8.4% and 69.3%, showing good performance.
CJ CheilJedang and CJENM's operating profit increased 55.5% and 135.7%, respectively.
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
