Q: Would you recommend adding to my CJ position at this price level? I'm down about 10% at this juncture. If there is no danger of a dividend cut, and if CJ rebounds in 2024 would it be a worthy risk bet? Please advise.
5i Research Answer:
CJ did cancel its dividend for a period of time during the pandemic. It has a very strong balance sheet, with basically no debt, and lots of cash flow. Payout ratio (12 months) is less than 50%. The stock is cheap at 9X earnings. We would not have real concerns about the dividend in the short term. But, the industry is very cyclical, and if commodity prices dropped management might still take a conservative approach to its payout. We would be OK buying some IF one is comfortable with the sector and position size is matching objectives.