Wednesday, May 1st, 2013
SEOUL, KOREA - The share price of CJ CheilJedang, Korea's No. 1 food processing company, has been in a downward spiral due to concerns about the new biotech business division's viability.
For the past few months during which most food company shares have been doing extremely well as they are considered good bets in times of recession, CJ shares fell to a nadir of 302,000 won (on April 22) for the year to date.
The share price of CJ CheilJedang has declined more than 10 percent in the month of April alone. Market watchers said this was largely because of the worries about the company's first-quarter performance as the price of lysine, the amino acid used for animal feed, has fallen of late. The price decline has been triggered by a price dumping from Chinese lysine makers. Given CJ's biotech division (of which the lysine sector is part) accounts for 33 percent of the total sales revenue last year, the market watchers said, the plunging lysine price was sufficient to cause a drop in the company's share price.
Song Gwang-soo, analyst with Meritz Securities, said, "If CJ completes its construction of lysine plant in Iowa within the year's end as planned, it will press further down the lysine price. The price of lysine may be a critical factor depressing the growth expectations on CJ's biotech division."