April 20, 2024

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[THE INVESTOR] CJ CheilJedang’s governance structure reshuffle will inevitably dilute shareholder value, said NH Investment and Securities on Dec. 20, lowering the target price to 420,000 won (US$387.24) from 450,000 won.

Through a capital increase, it will acquire additional 20.1 percent stake in CJ Korea Express owned by KX Holdings, a preemptive move before reinforcement of requisites for holding companies as well as a means to streamline governance structure, said analyst Han Guk-heui.

The increase in number of shares and expanding its stake in the logistics company will dilute earnings per share by 7 percent, and will led to a cool down in investor sentiments for the time being, said the analyst. 

Recently, though, non-food sector is showing signs of a turnaround, noted Han. Downward stabilization of international grain price, strong Korean won and M&A in Brazil will boost the sector and improve profits, she said.

Earnings prospect of its core business remains strong, added the analyst maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)