[Click eStock] "CJ ENM, Improving Profitability in Media Division"

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained a buy rating and a target price of 215,000 KRW for CJ ENM on the 7th.

In the first quarter, CJ ENM recorded an earnings surprise driven by improved media profitability due to increased TV advertising and content sales revenue. Sales amounted to 792 billion KRW, down 2% compared to the same period last year, while operating profit reached 953.7 billion KRW, growing 136% year-on-year.

Although sales slightly declined due to decreases in some commerce sectors such as fashion and beauty and delays in theatrical releases, profit growth expanded as sales increased in low-cost content areas such as TV advertising, digital sales including TVING, music albums, and non-face-to-face concerts.

The media division, which recorded record-breaking performance, showed high viewership ratings for major contents such as "Mr. Queen," "Vincenzo," and "Youn's Stay," which translated into TV advertising and content sales. Namsoo Lee, a researcher at Kiwoom Securities, said, "The film and music sectors, which had been sluggish due to contact restrictions, showed improved performance supported by revenue from additional copyrights and non-face-to-face concerts."

Although a decline in commerce performance is expected in the second quarter due to the resumption of offline activities compared to the previous year, the mobile live broadcasting platform CJ OnStyle is expected to help defend earnings by expanding its purchasing age group. TVING, which grew its paid subscribers through a partnership with Naver, plans to strengthen original content with titles such as "Welcome to Witch Restaurant" and "New Journey to the West Special: Spring Camp."

Researcher Namsoo Lee stated, "TV channels and TVING will each refine targeting suitable for their platform and channel characteristics, further strengthening TV advertising revenue, paid subscriber growth, and lock-in." He added, "The film sector, which diversified distribution strategies through TVING releases to mitigate theatrical release risks, and the music sector, with growing fandoms such as 'JO1' and 'ENHYPEN,' are expected to recover from their downturn."

The outperformance of TV advertising revenue, which highlights content competitiveness, is expected to continue for the time being. Furthermore, the share of digital commerce transaction volume is expected to increase, and digital transformation through TVING is anticipated to expand rapidly. The researcher added, "The underperforming film and music sectors are also expected to recover as the second half of the year progresses."

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