CJ CheilJedang is experiencing a strong early trading session, with shares rising over 5% amid expectations of a rebound in its overseas food and bio business.
As of 9:41 a.m. on May 14, the company’s stock was trading at 220,000 won, up 11,500 won (5.52%) from the previous trading day, according to the Korea Exchange.
On May 12, CJ CheilJedang reported consolidated sales of 7.111 trillion won and an operating profit of 238.1 billion won for the first quarter of this year. These figures represent declines of 1.4% and 28.5%, respectively, compared to the same period last year. Excluding the logistics sector, consolidated sales and operating profit were recorded at 4.271 trillion won and 148.5 billion won, respectively.
However, market sentiment is optimistic about the potential recovery in the overseas food and bio sectors.
Domestic processed food sales increased by 9% year-on-year, driven by the popularity of gift sets and new product sales. Similarly, overseas processed food sales rose by 4.5%, supported by growth in the Americas, Europe, and the Asia-Pacific region. Notably, revenue from the bio sector increased by 10.4% year-on-year, attributed to rising prices of key amino acids such as lysine. Despite expectations of a loss, the sector reported an operating profit of 5.5 billion won, exceeding forecasts.
Shim Eun-joo, a researcher at Hana Financial Investment, stated, "Due to the rapid changes in market conditions caused by the war, CJ CheilJedang's bio sector is expected to recover more quickly than anticipated. The current stock price reflects a price-to-earnings ratio of only 7.5 times, suggesting it may be a good time to buy considering the upward trend in earnings."
Shim identified several factors contributing to the recovery of the bio business, including rising amino acid prices due to increased grain costs, potential benefits from competitors' supply chain issues, and the possibility of anti-dumping duties on Chinese lysine in North America. She projected that operating profit in the bio sector could expand to around 50 billion won in the second quarter.
Kwon Woo-jung, a researcher at Kyobo Securities, also noted, "The decline in the bio and food sectors appears to be stabilizing, indicating that we have passed the bottom. Improvements in lysine and methionine prices, along with a recovery in overseas food business profitability, will drive earnings growth."
* This article has been translated by AI.
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