[Click eStock] CJ CGV, You Worked Hard, Now Let's Rise... A Year of Rebound

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 26th that it maintains a buy rating and a target price of 36,000 KRW for CJ CGV.

Daishin Securities described 2019 as the best year, 2020 as the worst year, but expects 2021 to be a year of resurgence.

CGV's consolidated sales in 2019 reached 1.9 trillion KRW (+10% yoy), and operating profit was 120 billion KRW (+57% yoy), setting an all-time high record. On a standalone basis, sales were 1 trillion KRW (+7% yoy) and operating profit was 75 billion KRW (+180% yoy), also marking an all-time high.

The Korean film market achieved a record high with an annual audience of 230 million, and CGV’s consolidated subsidiaries in China, Vietnam, and Indonesia also achieved their best performances.

However, last year, the number of viewers plummeted by 74%. This was a sharp decline in performance due to force majeure circumstances beyond CGV’s control.

Nonetheless, the trend of performance improvement domestically and internationally is still ongoing. Researchers Kim Hoe-jae and Lee Ji-eun stated, "Despite the emergence of OTT platforms, the position of theaters remains solid, and once new releases appear, the audience is expected to increase again." They added, "In a difficult environment, CGV has made various cost-saving efforts, and as of the first quarter, selling and administrative expenses per site were 480 million KRW, the lowest ever, reduced to 50% of the previous three years. If the number of viewers increases, profit leverage is expected to occur."

The Korean release of "Fast & Furious" on the 19th was successful, and if the global box office reaches the 1 trillion KRW level as with previous works, early screenings of films yet to confirm release dates or scheduled for release in the second half of the year are expected to be possible. Additionally, the issuance of 300 billion KRW in perpetual convertible bonds is expected to greatly improve the financial structure. As of the end of 2020, the debt ratio was 1,413%, but after the CB issuance, it is expected to decrease to 692%, and excluding lease liabilities, from 665% to 326%.

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