[Click eStock] "CJ ENM, Drama as the Trigger for Stock Price Reversal"

Hana Financial Investment Issues 'Buy' Rating and 190,000 KRW Target Price... Closing Price on 3rd at 127,000 KRW

[Asia Economy Reporter Kum Bo-ryeong] An analysis has emerged that the trigger for CJ ENM's stock price reversal ultimately lies in 'dramas.'

According to Hana Financial Investment on the 4th, CJ ENM's estimated first-quarter revenue is 773.8 billion KRW, with an operating profit of 39.9 billion KRW. These figures represent a 10% and 50% decline compared to the previous year, respectively.

Looking at operating profits by division, the media segment is expected to decrease by 44% year-on-year to 7.6 billion KRW. The reasons cited include consumption and advertising contraction due to the impact of COVID-19, and lineup gaps in Mnet and OCN during January and February. Lee Ki-hoon, a researcher at Hana Financial Investment, explained, "The film segment is expected to record a negative 3.1 billion KRW due to the poor performance of 'Closet,' and the music segment is expected to show a negative 2.7 billion KRW due to the absence of lineups other than IZ*ONE and costs related to Produce 101. Excluding commerce, the combined profit is estimated to be around 2 billion KRW."

The triggers for stock price reversal include controlling production costs that exceeded last year's plan by about 40 billion KRW and a recovery in box office performance. The researcher said, "CJ ENM aimed for a higher return on investment (ROI) by scaling up tentpole dramas such as Arthdal Chronicles, relying on Studio Dragon's competitiveness. However, due to poor box office performance and the weakening competitiveness of general dramas compared to other broadcasters, TV advertising experienced negative growth for the first time in 10 quarters. Last year, media operating profit excluding Studio Dragon invested about 42.2 billion KRW, similar to the excess production costs, but Studio Dragon also experienced negative growth due to poor box office performance. This year, tentpole dramas will be scheduled externally, and quasi-tentpole dramas such as 'Stranger 2,' 'Record of Youth,' and 'It's Okay to Not Be Okay' will be placed to control production costs and recover box office performance, aiming for growth again," he said.

Hana Financial Investment gave CJ ENM a 'Buy' rating with a target price of 190,000 KRW. The closing price on the 3rd was 127,000 KRW.

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