HONG KONG (Yonhap News) ― South Korean home shopping channel CJ O Shopping Co. will perform stronger next year on increasing overseas sales in China and other nations, investment bank Nomura Group said Thursday.
Selecting the TV shopping channel operator as a top pick in the South Korean retail sector, Nomura said CJ O Shopping has secured a solid base to grow overseas, despite some domestic hurdles including fees to be paid to cable television system operators.
“We expect a significant decline in losses from its overseas businesses in the second half of 2012 on growing scale and improved efficiency,” said Cara Song, a Nomura analyst.
CJ O Shopping is expected see recovery in its Chinese earnings in 2013, after continued investment in new cities, the investment bank said.
“We have turned more confident based on our expectations of a solid earnings recovery in China after investment in new city expansion,” it said, setting the target price of a CJ O Shopping share at 330,000 won ($308).
A possible initial public offering in China will also boost the company’s stock price, it said. The company said earlier it plans to list its China operation on the Chinese stock market in the next few years.
In 2004, CJ O launched a home shopping channel called Dongbang CJ with its Chinese partner Shanghai Media Group. It also opened a joint venture in 2008, dubbed Tiantian CJ Home Shopping Co., in the northern city of Tianjin.
Operations in other countries such as Japan, Vietnam and India should start to see losses narrow on a growing scale and improving operations now that the company has been in the markets for the past couple of years, it added.
Nomura said the economic recovery in the U.S. and China could boost the overall consumer sentiment in South Korea, increasing the country’s retail sector’s domestic sales as well.
“While South Korea’s weak property market and a continuous deleveraging by households persist, export-driven economic growth recovery should help consumers feel more confident in spending,” Song said.
