Corporate Logo(source: cjnews.cj.net)
On September 8, Hana Securities said on September 8 that the sharp increase in Chinese tourist arrivals in July has reduced the discount applied to CJ Olive Young’s stake valuation, raising its target price for CJ(001040) from 190,000 won to 210,000 won.
On September 5, CJ shares surged 11% following a media report that the company had begun procedures related to a potential merger with Olive Young, including initiating a valuation process to determine the merger ratio. However, after the company clarified that it had never reviewed the merger itself, the stock surrendered all of its earlier gains before closing 6.1% higher.
Hana Securities noted that such pronounced volatility reflected the market’s strong interest in the merger issue. While the speculation ultimately proved unfounded, the broker said it reaffirmed that the company’s downside risks remain limited.
The firm added that the risk of an unfavorable merger ratio with Olive Young—a factor that had long weighed on CJ shares—has diminished significantly after the government announced plans to revise the system so that valuations of listed companies in mergers or spin-offs can reflect intrinsic value, rather than relying solely on stock prices.
Even without an imminent merger, Hana Securities expects the value of Olive Young’s stake to continue rising. The broker cited the surge in Chinese tourist arrivals in July and the expected sales boost from visa-free group tourism, which will be allowed later this month.
The number of Chinese tourists visiting Korea in July reached 600,000, up 26.2% from 480,000 in June, accounting for most of the 7.0% overall increase in inbound visitors during the same period. With visa-free entry for Chinese group tourists set to begin in September, Olive Young’s inbound sales from foreign customers are expected to expand sharply.
Despite adding 15 directly operated stores in the second quarter, Olive Young’s average sales per store climbed from 900 million won in the first quarter to nearly 1.05 billion won in the second. Hana Securities projected that, with the combined effect of growing Chinese tourist traffic and a strategy to expand outlets in global shopping districts and large-scale malls, the proportion of offline inbound sales from foreign customers could rise from 24% in the first quarter of 2025 to 30% in the second quarter, and as high as 38~40% in the second half.
Olive Young’s operating profit this year is expected to exceed 770 billion won even under conservative assumptions. Based on projected net profit of 580 billion won and applying a 15x multiple, Olive Young’s enterprise value is estimated at roughly 8.8 trillion won. Taking into account CJ’s ownership stake, its Olive Young holdings are valued at approximately 4.5 trillion won, according to Hana Securities.
Analyst Jung-Wook Choi of Hana Securities commented, “As the government moves to improve corporate governance by requiring merger valuations to reflect not only share prices but also asset value and earnings power, the risk of highly unfavorable exchange ratios in the event of share price declines has diminished. With downside risks limited and upside potential intact, we continue to recommend a positive stance on CJ.”
*[KOSPI]CJ(001040) is a lifestyle and culture group that holds stakes in 9 subsidiaries including CJ CheilJedang, CJ ENM, and a total of 76 affiliate companies. It operates across four major business sectors: Food & Food service, Biotechnology, Logistics & New Distribution, and Entertainment & Media. The market capitalization is 5.164 trillion won(as of Septebmer 5, 2025, closing price).
Corporate Logo(source: cjnews.cj.net)
On September 8, Hana Securities said on September 8 that the sharp increase in Chinese tourist arrivals in July has reduced the discount applied to CJ Olive Young’s stake valuation, raising its target price for CJ(001040) from 190,000 won to 210,000 won.
On September 5, CJ shares surged 11% following a media report that the company had begun procedures related to a potential merger with Olive Young, including initiating a valuation process to determine the merger ratio. However, after the company clarified that it had never reviewed the merger itself, the stock surrendered all of its earlier gains before closing 6.1% higher.
Hana Securities noted that such pronounced volatility reflected the market’s strong interest in the merger issue. While the speculation ultimately proved unfounded, the broker said it reaffirmed that the company’s downside risks remain limited.
The firm added that the risk of an unfavorable merger ratio with Olive Young—a factor that had long weighed on CJ shares—has diminished significantly after the government announced plans to revise the system so that valuations of listed companies in mergers or spin-offs can reflect intrinsic value, rather than relying solely on stock prices.
Even without an imminent merger, Hana Securities expects the value of Olive Young’s stake to continue rising. The broker cited the surge in Chinese tourist arrivals in July and the expected sales boost from visa-free group tourism, which will be allowed later this month.
The number of Chinese tourists visiting Korea in July reached 600,000, up 26.2% from 480,000 in June, accounting for most of the 7.0% overall increase in inbound visitors during the same period. With visa-free entry for Chinese group tourists set to begin in September, Olive Young’s inbound sales from foreign customers are expected to expand sharply.
Despite adding 15 directly operated stores in the second quarter, Olive Young’s average sales per store climbed from 900 million won in the first quarter to nearly 1.05 billion won in the second. Hana Securities projected that, with the combined effect of growing Chinese tourist traffic and a strategy to expand outlets in global shopping districts and large-scale malls, the proportion of offline inbound sales from foreign customers could rise from 24% in the first quarter of 2025 to 30% in the second quarter, and as high as 38~40% in the second half.
Olive Young’s operating profit this year is expected to exceed 770 billion won even under conservative assumptions. Based on projected net profit of 580 billion won and applying a 15x multiple, Olive Young’s enterprise value is estimated at roughly 8.8 trillion won. Taking into account CJ’s ownership stake, its Olive Young holdings are valued at approximately 4.5 trillion won, according to Hana Securities.
Analyst Jung-Wook Choi of Hana Securities commented, “As the government moves to improve corporate governance by requiring merger valuations to reflect not only share prices but also asset value and earnings power, the risk of highly unfavorable exchange ratios in the event of share price declines has diminished. With downside risks limited and upside potential intact, we continue to recommend a positive stance on CJ.”
*[KOSPI]CJ(001040) is a lifestyle and culture group that holds stakes in 9 subsidiaries including CJ CheilJedang, CJ ENM, and a total of 76 affiliate companies. It operates across four major business sectors: Food & Food service, Biotechnology, Logistics & New Distribution, and Entertainment & Media. The market capitalization is 5.164 trillion won(as of Septebmer 5, 2025, closing price).