Innocean Holds 600 Billion KRW in Cash... Digital Advertising Also Up in the Untact Era
Positive Outlook Emerges Despite Impact of COVID-19
[Asia Economy Reporter Minwoo Lee] Due to the economic slowdown caused by the novel coronavirus infection (COVID-19), Innocean's stock price has fallen 34% compared to the beginning of the year. Nevertheless, it is securing abundant cash, and there is an analysis that it will overcome the crisis well due to the expansion of digital advertising demand in the 'untact (non-face-to-face, social distancing)' era.
On the 28th, Samsung Securities gave Innocean a 'buy' investment rating and set a target price of 78,000 won. This is about 13% lower than the previous target price of 90,000 won. Minha Choi, a researcher at Samsung Securities, said, "This month, as we entered the pandemic phase, the impact has expanded worldwide to Europe, the Americas, and other regions, making it inevitable to lower the global advertising market outlook," adding, "Based on last year, Innocean's gross profit by region was 54% in the Americas, 25% at headquarters, 7% in Europe, 7% in emerging markets, 2% in China, and 5% in others, so it is difficult to be free from the simultaneous global economic contraction effects."
However, there are still positive prospects. The current market capitalization has dropped to about 1.1 trillion won, which is analyzed to have already reflected COVID-19. As of the end of last year, after the payment for the acquisition of the Welcome Group, cash holdings reached 600 billion won, indicating high stability.
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The 'untact' boom is also a favorable factor. It is expected that the recent untact trend will further increase the proportion of digital advertising. Researcher Choi explained, "Affiliates are also increasing the proportion of online strategies in new car marketing and changing their approach, increasing advertising using digital instead of offline," adding, "We expect to continue securing advertising orders by responding to the needs of clients."
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