New Car Launch and Welcome Acquisition Boost Innocean, Soaring with Double Wings

All Five Trading Days Last Week Rose... 52-Week Highs Also Updated

[Asia Economy Reporter Eunmo Koo] The stock price of Innocean, an advertising agency affiliated with Hyundai Motor Group, is showing an upward trend. This is attributed to last year's strong performance and high expectations for this year's mergers and acquisitions (M&A) effects and new car launches by affiliated companies.

According to the Korea Exchange on the 10th, Innocean closed at 74,400 KRW on the 7th, up 0.13% (100 KRW) from the previous trading day. Innocean rose for all five trading days last week, recording a 5.1% return during this period. On the 4th, it even reached an intraday high of 77,000 KRW, setting a new 52-week high.

It is analyzed that the recent rise in Innocean's stock price is driven by expectations that the company will continue its good momentum this year after posting results that significantly exceeded market expectations last year. On the 3rd, Innocean announced that its consolidated operating profit for the fourth quarter of last year increased by 17.8% year-on-year to 39.7 billion KRW. This figure surpassed market expectations by more than 17%. Sales during the same period also grew by 8.2% to 359.5 billion KRW.

Although Innocean experienced performance burdens in the first to third quarters of last year due to the high base effect from the 2018 Pyeongchang Winter Olympics and the Russia World Cup, it achieved a performance rebound in the fourth quarter thanks to new car launches by affiliates such as the Grandeur and K5. Additionally, the acquisition effect of the Australian advertising company 'Wellcom' group, acquired in August last year, was also reflected. Wellcom was expected to be reflected from the first quarter of this year, but it was incorporated early from December last year, contributing to the overseas segment's performance increase.

This positive trend is expected to continue this year as Hyundai's 'Genesis' brand marketing fully kicks off. Hyundai plans to continue new car launches starting with Genesis's first sports utility vehicle (SUV), the GV80, last month, followed by the mid-to-large sedan G80 in the first half of the year, and the mid-size SUV GV70 in the second half. Researcher Hyoji Nam from KTB Investment & Securities predicted, "Despite the bleak outlook for the domestic traditional advertising market this year, Innocean is expected to grow as media agency services increase through Genesis marketing representation."

Wellcom's full-year performance will also be fully reflected. In particular, since Wellcom does not advertise for Hyundai and Kia Motors, its incorporation is expected not only to increase performance but also to diversify advertisers and regions and expand digital capabilities. Researcher Hoejae Kim from Daishin Securities forecasted, "Through the acquisition of Wellcom, the proportion of non-affiliated advertisers will increase by bringing in clients such as Louis Vuitton, L'Or?al, and Victoria's Secret, resulting in advertiser diversification effects." Furthermore, even after acquiring Wellcom, Innocean still holds about 600 billion KRW in cash, making additional M&A pursuits possible.

The performance increase due to new car effects and Wellcom's addition is expected to appear from the first quarter of this year. According to financial information provider FnGuide, Innocean's first-quarter sales are estimated at 365.6 billion KRW, a 17.5% increase year-on-year, and operating profit is projected to rise 24.0% to 30.8 billion KRW.

This content was produced with the assistance of AI translation services.