[Click eStock] "Innocean, Advertising Market Bottom Passed... Positive Outlook for Second Half"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment evaluated on the 21st that Innocean has emerged from the advertising industry downturn caused by the novel coronavirus disease (COVID-19), and expects a positive outlook for the second half of the year. Accordingly, they maintained a 'Buy' investment rating and a target price of 66,000 KRW.

Hong Sejong, a researcher at Shinhan Financial Investment, analyzed, "Innocean's consolidated operating profit for the third quarter is expected to be 29.4 billion KRW, showing a 3.3% improvement in profitability compared to the previous year," and added, "Gross profit from overseas sales, led by the acquisition effect of Wellcom, is expected to increase by 17.3% to 113.2 billion KRW."

It is forecasted that the strengthened new car cycles of major advertisers and the base effect will offset the adverse impacts caused by COVID-19.

There is also sufficient mid- to long-term momentum. Due to strategic changes by advertisers led by electric vehicles, it is essential to execute large-scale advertising expenditures over the coming years to ensure the successful establishment of the pure electric vehicle brand Ioniq. The proportion of advertising expenses within the sales of major advertisers is 2.4%, and if the expansion of sales volume driven by product competitiveness is assumed, this proportion is expected to continue rising.

Researcher Hong Sejong stated, "The GV80 is also expected to be launched in the Americas in the second half of the year," and added, "Related advertising and promotional expenses are expected to be actively executed as early as September to October."

He emphasized, "Consolidated operating profit for the fourth quarter is expected to increase by 3.6% to 41.3 billion KRW despite the negative base effect and COVID-19 impact," and stressed, "Considering the net cash holdings exceeding 50% of market capitalization and the advertising industry having passed its bottom, the current valuation is inexplicable."

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