[Featured Stock] CJ ENM Falls 4% on Disappointment Over This Year's Earnings Guidance

[Asia Economy Reporter Song Hwajeong] CJ ENM is experiencing a decline due to disappointment over this year's earnings guidance.

As of 9:51 a.m. on the 5th, CJ ENM was trading at 151,900 KRW, down 7,700 KRW (4.82%) from the previous day.

The disappointment over this year's earnings guidance is interpreted as leading to the stock price weakness. The day before, CJ ENM announced through a disclosure that this year's earnings guidance includes sales of 3.8 trillion KRW and operating profit of 250 billion KRW. Lee Kihoon, a researcher at Hana Financial Investment, said, "Despite difficulties in TV advertising and deficits in the film sector throughout the first half of last year, earnings expectations rose due to the normalization of profits at Studio Dragon and high growth in commerce. However, this year’s operating profit guidance was set at 250 billion KRW, an 8% decrease compared to the same period last year," adding, "The intense investment in TVING, which put pressure on earnings, can be fully understood as a desperate effort to grow in a media industry rapidly changed by COVID-19. However, it was insufficient consideration for investors who expected significant earnings growth following the COVID-19 recovery." The researcher added, "Considering that investment in TVING will gradually increase over three years, concerns about earnings may continue until 2022."

Yuanta Securities downgraded CJ ENM’s investment opinion from ‘Buy’ to ‘Hold,’ stating that while earnings expectations are lowering, an investment expansion phase is approaching. Park Seongho, a researcher at Yuanta Securities, said, "Through investment, TVING is expected to secure differentiated competitiveness among local online video services (OTT)," but added, "However, with earnings expectations lowering and an investment expansion phase approaching, the current time is not suitable for increasing stock weight."

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