[Click eStock] "Cheil Worldwide Q2 Operating Profit Expected to Decrease by 22%... Target Price Down"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities maintained a 'Buy' rating on Cheil Worldwide, citing inevitable revenue contraction and a 20% decline in operating profit in the second quarter, but lowered the target price by 14.29% from 28,000 KRW to 24,000 KRW.

Researcher Kim Hyunyong of Ebest Investment & Securities stated, "The gross profit for the second quarter is expected to decrease by 13.2% year-on-year to 267.2 billion KRW, and operating profit is projected to drop by 22% to 54.1 billion KRW, falling about 10% short of market expectations," adding, "As the impact of COVID-19 intensifies, revenue contraction across all domestic and international business regions appears unavoidable." He analyzed that the pace of cost control, including labor costs, has not kept up with the speed of revenue shrinkage through the second quarter, suggesting a larger decline in profit."

Researcher Kim Hyunyong explained, "Throughout the first half of the year, in preparation for a prolonged COVID-19 battle, the company expanded its digital business and introduced flexible cost structures, creating a business model capable of defending profits even in a weak sales environment. Starting from the second half, these efforts are expected to take effect, enabling a reduction in profit decline in the third quarter and a return to profit growth in the fourth quarter."

He also noted that the annual operating profit is expected to be 199.2 billion KRW, reflecting an unavoidable 3.3% decrease compared to last year, but the decline is anticipated to significantly outperform other stocks affected by COVID-19.

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