CJ CheilJedang’s profits from overseas will expand if it wins the bid to acquire Schwan’s Company, the second-largest frozen pizza maker in the US, said Kiwoom Securities on Oct. 18 maintaining a “buy” recommendation and 430,000 won (US$380.09) target price.
Following the acquisition, CJ’s earnings per share next year will gain by an additional 15 percent. In terms of stock price, a successful bid will be more important than its earnings prospects. It will boost profits from processed food and overseas business and could create synergies with its existing US operations, said analyst Park Sang-jun.
Its operating profit in the third quarter will remain at the same level as last year at 261.6 billion won. Excluding sales of CJ Healthcare and profits from CJ Logistics, the figures are 10 percent higher. Profits across sectors will advance from last year, as those from biological resource unit increase by 23.4 billion won, turning around its earnings. Its acquisition of Selecta will further lift the bottom line by 9.6 billion won, explained the analyst.