[Click eStock] "Cheil Worldwide, Solid Performance Despite COVID-19 Impact on Advertising Market"

[Asia Economy Reporter Park Ji-hwan] Daishin Securities maintained its 'Buy' rating and target price of 31,000 KRW for Cheil Worldwide on the 26th, stating that although the advertising market has somewhat contracted due to the novel coronavirus infection (COVID-19), the company's performance is expected to remain solid.

Kim Hoe-jae, a researcher at Daishin Securities, forecasted, "Due to the domestic consumption contraction caused by COVID-19 and the postponement of the Tokyo Olympics, although not significant, the advertising boom has disappeared, leading to a slight downward revision in performance outlook."

However, unless the current situation worsens causing a simultaneous global recession or Samsung Electronics drastically reduces its marketing expenses, concerns about annual performance are unnecessary.

He explained that due to intensive digital business expansion efforts over the past five years, after the COVID-19 crisis ends, the digital marketing trend is expected to spread further, potentially leading to greater performance improvement.

Researcher Kim evaluated, "The growth rate of domestic and international advertising markets is slowing in line with the economy, but the digital advertising market is gradually expanding due to changes in consumer trends," adding, "Cheil Worldwide's digital proportion is 39%, and it is following the growth rate of the digital market with know-how accumulated over the past five years from operating major advertisers' .com sites, while also expanding digital business targeting non-affiliated advertisers."

He said, "Stable performance is expected based on captive clients, and the company is keeping up well with digital trends," adding, "There is no reason for Cheil Worldwide, which holds 400 billion KRW in cash, to receive the lowest valuation in its history."

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