CJ Corp.(001040)[Edaily Reporter KIM YOON-JEONG ] KIWOOM Securities forecast that while Olive Young and Foodville will continue to see revenue growth, a slowdown in profitability is inevitable due to expanded investments in new businesses and U.S. operations. The firm maintained its “Buy” rating but lowered the target price to 220,000 won.

On the 4th, Park Sang-jun, an analyst at KIWOOM Securities, stated, “While Olive Young and Foodville are expected to show solid revenue growth, concerns over declining profitability may increase due to expanded investments in new businesses and store expansion in the U.S.” He added, “In the medium to long term, it is important to pay attention to the point when the increased investments by both companies begin to yield results.”
CJ Corp.’s second-quarter consolidated operating profit is projected to be 595.6 billion won, a 4% decrease from the same period last year, falling short of market expectations.
Olive Young is expected to maintain revenue growth similar to that of the first quarter, as growth momentum from new businesses—such as Olive Better and its U.S. operations—is added to sales growth driven by inbound tourism and online sales. Foodville is also forecast to continue its global revenue growth, centered on the U.S.
However, analysts noted that both Olive Young and Foodville are expected to show somewhat weak overall profitability as they continue to expand investments to drive mid- to long-term revenue growth.
Analyst Park explained, “For Olive Young, revenue growth driven by inbound tourism is highly likely in the second half of the year due to increased interest in K-content and the spillover benefits from the Korea-Japan economic cooperation agreement. Revenue growth from new businesses, such as Olive Young U.S. and Olive Better, is also anticipated.” He added, “However, considering that these new businesses are in their early stages and require marketing investments, a sacrifice in overall profitability is unavoidable.”
Foodville projected that while the pace of store openings has slowed somewhat following the completion of its new factory in Georgia, U.S., store openings will accelerate starting in the second half of the year, leading to a partial recovery in sales growth. Additionally, the firm predicted that consolidated operating profit for the second half of the year is likely to return to year-over-year growth, driven by the recovery in profitability of CJ CheilJedang Corp.’s bio business division.
Analyst Park said, “In the short term, some sacrifice in profitability due to the revenue growth of Olive Young and Foodville is deemed inevitable; however, in the medium to long term, it is important to pay attention to the point when the expanded investments of both companies begin to yield results.”