[Click eStock] "CJ CGV, Business Improvement Expected Thanks to With Corona"

Movie Theaters Now Open 24 Hours with On-Site Dining
Shinyoung Securities Maintains CJ CGV Target Price at 31,000 Won

[Asia Economy Reporter Gong Byung-sun] CJ CGV's third-quarter performance this year still showed a deficit. However, it is expected to achieve business improvement supported by the gradual return to normal life from COVID-19.

According to Shin Young Securities on the 8th, CJ CGV's third-quarter sales increased by 4.4% year-on-year to 162.1 billion KRW, while operating loss continued at 77.5 billion KRW during the same period. Sales were 35.07% below market consensus.

Weakness in the domestic and Vietnam markets affected the results. Domestic sales decreased by 9.5% year-on-year to 89.3 billion KRW, and Vietnam sales dropped 94% to 900 million KRW during the same period. However, sales in China and Turkey increased. China’s sales rose 42.6% year-on-year to 51.2 billion KRW, and Turkey’s sales surged 1054.5% to 12.7 billion KRW.

Researcher Shin Su-yeon of Shin Young Securities analyzed, “Due to the resurgence of COVID-19 mainly in Korea, Vietnam, and Indonesia, the results fell significantly short of consensus. Although sales in China and Turkey increased due to accelerated reopening, those regions still posted operating losses, resulting in poor performance.”

However, performance is expected to improve with the “With Corona” phase, which means gradual normalization. In Korea, from the 1st of this month, quarantine easing plans were implemented, allowing 24-hour operations and permitting eating and drinking in vaccination-only zones within cinemas under the vaccine pass system. Additionally, the Korean Film Council is distributing 6,000 KRW discount coupons through the Mind Vaccine movie viewing campaign to encourage visitors.

Researcher Shin explained, “The variables that were disappointing for performance improvement, such as restricted operating hours and prohibition of eating, have changed favorably. Gradual performance improvement is expected going forward.”

Accordingly, Shin Young Securities maintained CJ CGV’s investment opinion as ‘Neutral’ and target price at 31,000 KRW. The closing price on the 5th was 29,900 KRW. Researcher Shin said, “Although gradual performance improvement is positive, quarterly operating conditions remain uncertain, so the neutral investment opinion is maintained.”

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