"Cheil Worldwide, Uncertain Business Environment Due to COVID-19 Impact...Target Price ↓"

[Asia Economy Reporter Park Jihwan] Hyundai Motor Securities evaluated on the 14th that Cheil Worldwide inevitably faces an uncertain management environment due to the impact of COVID-19. Accordingly, the investment opinion is maintained as 'Buy,' but the target price was lowered from the previous 31,000 KRW to 27,000 KRW.

Hwang Seongjin, a researcher at Hyundai Motor Securities, explained, "Despite the negative business environment recently in Korea, China, and Southeast Asia due to COVID-19, Cheil Worldwide is offsetting the reduction in retail and promotion by shifting to digital advertising."

The growth rate for the first quarter is expected to fall short of the initial guidance of about 7% in gross profit. However, profitability is expected to be defended to some extent through digital transformation and cost control.

Researcher Hwang emphasized, "Although it is difficult to predict the spread pattern of COVID-19 in regions such as the Americas and Europe, we believe that the negative impact can be offset to a certain extent through digital transformation of the retail business, expansion of market share within captive, and effective cost control."

Researcher Hwang added, "However, the timing of M&A efforts being explored for digital growth is likely to be postponed."

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