[Click eStock] "CJ CGV, Profit Recovery Outlook Boosts Target Price by 24%"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities on the 18th issued a buy rating and raised the target price for CJ CGV by 24% from the previous to 36,000 KRW. This is based on the expectation that the number of viewers will mostly recover this year, restoring profits to previous levels.

Daishin Securities estimated that last year's fourth-quarter sales were 190 billion KRW, down 63% from the same period the previous year. Operating losses were expected to have turned to a deficit of 53 billion KRW compared to the previous year. The nationwide number of viewers in the fourth quarter was 9.7 million, showing improvement from the lowest 6.36 million in the second quarter. However, it was lower than the 17 million in the peak third quarter.

In China, theaters reopened from the third quarter, showing a rapid recovery. Box office revenue was zero in the second quarter but reached 6 billion yuan in the third quarter and 12 billion yuan in the fourth quarter. As of the 15th, box office revenue was 2.3 billion yuan, already surpassing the performance of January.

Last year's number of viewers was 60 million, which is 27% of the average of the previous five years (2014?2019), due to the impact of COVID-19. This year, the number of viewers is estimated to grow 140% to 140 million compared to last year.

Heejae Kim, a researcher at Daishin Securities, said, “Ticket prices were raised by an average of 1,000 KRW in November last year. Due to cost reductions in difficult circumstances, selling and administrative expenses per site were cut to half of the level of the past five years, so even if the number of viewers recovers to 65%, most of the profits will be restored.”

Korean films are expected to be steadily released. The number of viewers for releases in August last year recovered to 51% to a maximum of 87% of 2019 levels, indicating that there is sufficient theater demand as long as there are releases. Hollywood films such as ‘Soul’, ‘Kingsman: The First Agent’, ‘Black Widow’, ‘007 No Time to Die’, ‘The Boss Baby 2’, and ‘Fast & Furious 9: The Ultimate’ are also planned to be mostly released in the first half of this year.

Researcher Kim said, “We raised the EV/EBITDA multiple for target price estimation from 50% to 65% of the average of the previous five years (2014?2019), thereby increasing the target price. Most profits are expected to be recovered this year.”

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