International Expansion And Health Trends Will Secure Future Prospects

Key Takeaways

• International expansion, cost competitiveness, and digital channel growth are set to enhance global presence, operational efficiency, and long-term profitability.
  
• Product innovation focused on health and convenience positions the company to capture evolving consumer trends and strengthen premium sales and margins.
  
• Prolonged weak domestic demand, intense BIO segment competition, and rising costs are straining margins, exposing the company to revenue, earnings, and market share risks.

Catalysts

Engages in food and bio businesses in South Korea and internationally.

• Expansion into international markets, including the ramp-up of the Chiba plant in Japan, accelerated product launches in Europe, and normalized U.S. production, is set to drive sustained overseas sales growth and broaden the company's global revenue base, positioning CJ Cheiljedang to benefit from the rising demand for Korean and Asian cuisine.
  
• Increasing focus on health-oriented and convenient products-such as low-sugar dressings, ready-to-eat meals, and product innovations targeting wellness trends-positions CJ Cheiljedang to capture the shift in consumer preferences toward healthier and functional foods, likely enhancing premium product sales and supporting higher average selling prices and margins.
  
• Enhanced cost competitiveness in the BIO business, driven by global protectionist measures (such as antidumping tariffs on Chinese lysine in Europe and the U.S.), a diversified global production base, and lower input costs (raw sugar), supports market share gains and improved profitability in higher-margin bio-ingredients, benefiting both revenue and net margins.
  
• Digital transformation and optimization of online sales channels, as evidenced by 24% year-over-year growth in processed food online sales, enable greater operational efficiency and access to shifting retail channels, providing resilience against offline headwinds and supporting future operating margins and topline growth.
  
• Anticipated structural growth in markets like salmon feed (driven by demographic and dietary shifts), as well as further automation and product innovation in manufacturing, position the company to leverage long-term shifts toward protein diversification and operational efficiency, underpinning medium
• to long-term revenue and earnings expansion.

CJ Cheiljedang Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming CJ Cheiljedang's revenue will grow by 3.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.4% today to 2.5% in 3 years time.
• Analysts expect earnings to reach ₩824.0 billion (and earnings per share of ₩39966.68) by about September 2028, up from ₩129.4 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 7.9x on those 2028 earnings, down from 28.5x today. This future PE is lower than the current PE for the KR Food industry at 9.3x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.32%, as per the Simply Wall St company report.

CJ Cheiljedang Future Earnings Per Share Growth

Risks

• Persistent weakness in Korean domestic food demand, compounded by economic downturns and rising raw material costs, is leading to shrinking sales volumes and operating profit declines, which could result in long-term pressure on consolidated revenue and margins if domestic trends do not recover.
  
• Heightened competition and oversupply in the BIO segment, particularly for specialty amino acids, is causing price erosion amid increased production from Chinese competitors, threatening CJ Cheiljedang's ability to sustain revenue growth and profitability in higher-margin segments.
  
• Reliance on protectionist trade measures (e.g., antidumping tariffs on Chinese lysine) to support market share in BIO products introduces risk; any policy changes or increased competition could erode current price advantages and reduce earnings stability over time.
  
• Structural dependence on specific product categories (such as pizza in the U.S. and Mandu in Japan) and limited progress in diversifying beyond premium and traditional categories may expose the company to demand shifts and disrupt growth prospects, increasing top-line and market share vulnerability.
  
• Ongoing margin pressure from persistent raw material cost volatility, labor expenses, and additional capital expenditures (e.g., for new plant openings and digitalization) may outpace the company's ability to pass on costs or realize anticipated efficiency gains, ultimately hurting operating profits and net earnings growth.

Valuation

• The analysts have a consensus price target of ₩313352.941 for CJ Cheiljedang based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩360000.0, and the most bearish reporting a price target of just ₩250000.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₩32369.8 billion, earnings will come to ₩824.0 billion, and it would be trading on a PE ratio of 7.9x, assuming you use a discount rate of 9.3%.
• Given the current share price of ₩230000.0, the analyst price target of ₩313352.94 is 26.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.