[Click eStock] "Innocean, April is the Best Time to Buy... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Shinhan Financial Investment on the 5th viewed April as the optimal buying period for Innocean and raised the target price from 79,000 KRW to 85,000 KRW. The investment opinion was maintained as 'Buy.'

Hong Sejong, a research fellow at Shinhan Financial Investment, stated, "We applied an 8x multiple to the 2021 EBITDA and changed the method for calculating the target price as the net cash size approaches 50% of the market capitalization. We maintain a buy perspective based on nearly 20% annual net profit growth, continuous spending by major advertisers, and valuation in the undervalued range."

First-quarter performance this year is expected to be solid. Shinhan Financial Investment estimated Innocean's consolidated gross profit for Q1 this year to increase by 5.6% year-on-year to 152.6 billion KRW, and operating profit to rise by 3.3% to 28 billion KRW. Headquarters gross profit is expected to increase by 4.9% to 26.4 billion KRW, and overseas gross profit by 5.9% to 126.5 billion KRW. Research fellow Hong analyzed, "Despite challenging business conditions, solid performance is expected. The major advertiser's Genesis-related spending contributes to performance improvement, and company-wide cost efficiency efforts likely continued this quarter."

A clear base effect is expected in the second quarter. Gross profit for Q2 is forecasted to increase by 13.9% year-on-year to 147.5 billion KRW, and operating profit by 88.2% to 30.1 billion KRW. Hong said, "There is a negative base effect in Q1, but significant base effects are expected in Q2 and Q3. Since Q2 operating profit decreased by 44% due to the impact of COVID-19, the projected profit growth rate is fully achievable."

April, just before the Q1 earnings announcement, is considered the optimal buying period. Hong explained, "Domestic and international economic recovery leads to increased advertising spending by companies. It is necessary to proactively invest not only as the advertising peak season begins but also in anticipation of strong performance lasting more than nine months."

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