[Click eStock] "Cheil Worldwide, Beneficiary of COVID-19 Recovery... Double-Digit Top-Line Growth"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment announced on the 11th that it maintains a target price of 28,000 KRW for Cheil Worldwide, expecting a digitally optimized business structure and a resumption of double-digit external growth.

Cheil Worldwide's consolidated gross profit for the first quarter of this year is expected to increase by 7% year-on-year to 275 billion KRW, and operating profit is projected to rise by 30% to 40 billion KRW.

Hong Se-jong, a researcher at Shinhan Financial Investment, said, "The domestic situation is very favorable. The headquarters' gross profit for the first quarter of this year is expected to increase by 10.8% to 64.7 billion KRW, with both broadcast and new media channels showing high growth due to active spending by major advertisers," adding, "Overseas recovery has also begun, with gross profit expected to increase by 5.8% to 210.3 billion KRW." This is because the U.S., which has emerged as a key region, along with China and Europe, is expected to see significant performance improvements.

Advertising is considered one of the industries that benefits most from the recovery from COVID-19. For this reason, Cheil Worldwide's operating profit for the second quarter of this year is expected to reach a record high of 69.5 billion KRW (+29.2%). During this period, consolidated gross profit is expected to be 318.3 billion KRW (+21.0%), and operating profit 69.5 billion KRW (+29.2%), marking the highest quarterly performance ever. Both headquarters and overseas operations are expected to improve. Headquarters' gross profit is expected to grow by 7.4%, and overseas by 26.4% thanks to the base effect. In particular, North America and Europe are expected to see rapid external growth focused on digital and production.

Researcher Hong said, "Cheil Worldwide was a company assigned a PER (price-to-earnings ratio) of around 20 times during 2018-2019," adding, "The 2021 PER is still only around 15 times, so considering the high dividend payout ratio, stable cash flow, and growth rate approaching 10%, it is clearly undervalued."

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