[Click eStock] "Cheil Worldwide, Q1 Earnings Exceed Market Expectations"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment evaluated Cheil Worldwide on the 29th, expecting better-than-market first-quarter performance this year, projecting a more than 20% increase in consolidated gross profit due to the base effect, with clear performance improvements both domestically and overseas. They maintained a 'Buy' investment rating and a target price of 28,000 KRW.

Hong Sejong, a researcher at Shinhan Financial Investment, stated, "We maintain a buy perspective based on the digital segment accounting for nearly 45% of total gross profit, continuous spending by major advertisers, and double-digit external growth," adding, "It is an absolute leader in the earnings season."

The consolidated operating profit for the first quarter is expected to reach 40.4 billion KRW, a 32.2% increase compared to the previous year. The advertising turnaround is just beginning, with a steep recovery both at headquarters (domestic) and abroad. First-quarter headquarters gross profit is expected to increase by 11.1% year-on-year to 64.9 billion KRW. He said, "The effect of major advertisers' spending is confirmed across all media," and "meaningful performance improvements are expected in all areas including broadcasting, digital, and production."

The overseas market is also favorable. First-quarter overseas gross profit is expected to increase by 5.8% to 210.3 billion KRW. The Americas are expected to lead the expansion with over 25% growth. Researcher Hong analyzed, "The core region of Europe has also passed the bottom of the business cycle," and "with ongoing cost-efficiency efforts, the consolidated operating profit margin is expected to be 5.5% even in the off-season."

The advertising industry’s business conditions are explained to have a close correlation with consumer sentiment. This is why global advertising agencies’ stock prices sharply declined for nearly six months from the early stages of the COVID-19 pandemic last year. A V-shaped rebound among similar businesses was confirmed starting in September. The vaccine effect and confidence in economic recovery are driving the steep stock price rise.

Researcher Hong forecasted, "Unlike other COVID-19 affected sectors, it was possible to generate profits even during the most difficult times, and now it is on the verge of record-high performance," adding, "Consolidated operating profit for the second quarter is expected to increase by 30.8% to 70.4 billion KRW."

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