[Click eStock] Innocean Unshaken Despite Market Fear... 24% UP in This Year's Performance

Sales and Operating Profit Both Expected to Increase
Dedicated Marketing for Hyundai G80, Stable Orders Including Kia CI Change

[Asia Economy Reporter Minwoo Lee] Innocean is expected to increase both sales and operating profit by more than 20% compared to last year. Despite the ongoing recession caused by the novel coronavirus disease (COVID-19), it is analyzed that stable performance can be achieved as Hyundai Motor Company's marketing activities are expected to continue.

On the 12th, Daishin Securities forecasted that Innocean will achieve sales of 154 billion KRW and operating profit of 36 billion KRW this year, representing increases of 24.1% and 24.5% respectively compared to last year.

Although there will be an impact from the recession due to COVID-19 starting from the first quarter, decent performance is expected. Kim Hee-jae, a researcher at Daishin Securities, explained, "The advertising volume related to the Pyeongchang Olympics in the first quarter of 2018 decreased, causing poor performance in the first quarter of last year, and additional negative growth may occur due to the impact of COVID-19. However, since the advertising volume for the Pyeongchang Olympics and the World Cup in 2018 decreased, the performance base is low, so after resolving the COVID-19 issue, advertising execution will normalize in the second half of the year, resulting in an annual growth of 6%."

Steady advertising volume from Hyundai Motor Company and Kia Motors was also seen as a positive factor. Researcher Kim said, "In the Americas region, which accounts for 70% of overseas performance and 50% of total performance, Innocean consistently handles advertising volume for Hyundai Motor Company and Kia Motors, so there is no need to worry about the 1Q20 performance at least."

One of the recent reasons for the stock price decline was the partial closure of Hyundai Motor Company and Kia Motors factories, the cancellation of the Geneva Motor Show in Switzerland scheduled for this month, and concerns about delays in the launch and marketing reduction of the new G80 model. Regarding this, Researcher Kim explained, "Typically, changes in marketing expenses due to advertisers' strategy revisions take about two quarters, so there is no immediate impact on marketing in the first quarter of this year. In fact, there has been no sign of marketing reduction by Hyundai Motor Company and Kia Motors yet, and the new G80 model, after deciding to reveal it online and offline instead of at the Geneva Motor Show, already released images on the 5th, so it is expected to be launched within this month or next month." It is analyzed that if the online and offline reveal is chosen instead of the motor show, dependence on Innocean for marketing could increase further. Additionally, the change in Kia Motors' corporate identity (CI) and the reflection of the performance of Welcome, acquired at the end of last year, were cited as grounds for achieving stable performance.

For these reasons, Daishin Securities gave Innocean a 'Buy' investment rating with a target price of 100,000 KRW. The closing price on the previous day was 61,200 KRW.

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