[Click eStock] "CJ CGV, Normalization Speed to Accelerate with COVID Vaccine Vaccination"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 36,000 KRW for CJ CGV on the 24th.

Heejae Kim, a researcher at Daishin Securities, said, "With the domestic supply of COVID-19 vaccines, a return to normal daily life will begin," adding, "Theaters were the most affected by COVID-19, but the normalization speed will also be fast."

In China, where COVID-19 first occurred, theaters were completely closed from February to July last year. Since reopening in August of the same year, the number of viewers has rapidly increased, and box office (BO) revenue reached a record high of 10.8 billion yuan as of the 22nd. During the Lunar New Year period, it recorded 7.7 billion yuan, about 50% higher compared to the previous record high in 2019. In January this year, it also recorded 3.3 billion yuan, an increase of about 40% compared to the previous year.

This year, the number of domestic viewers is expected to recover to 140 million, which is about 50-60% of the average of the previous five years (2015-2019). Last year, the number of viewers was only 60 million, which is 27% of the same period.

In November last year, ticket prices were raised by an average of 1,000 KRW, and selling and administrative expenses per site were reduced to half the level of the past five years through cost-cutting. Researcher Heejae Kim explained, "If the number of viewers recovers to a certain level, an environment where profit leverage is sufficiently possible will be created," adding, "If the number of viewers recovers as expected this year, profits will reach 43 billion KRW, about 50%." If the number of viewers recovers to 72% (160 million), profits are expected to reach 70 billion KRW, about 83%.

New releases are also expected to continue steadily. Researcher Kim said, "As long as there are new releases, theater demand is sufficient," and added, "If Hollywood movies are released without disruption, profit recovery will exceed the speed of viewer recovery."

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