[Click eStock] "Jcontentree's Broadcasting Division to Grow Larger After Growing Pains"

Q3 Earnings Fall Short in Both Broadcasting and Theater
Daishin Securities Maintains Jayconteruri Target Price at 67,000 Won

[Asia Economy Reporter Gong Byung-sun] Both the broadcasting and theater divisions of Jcontentree showed disappointing third-quarter results this year. However, the broadcasting division is expected to grow in scale after experiencing growing pains.

According to Daishin Securities on the 8th, Jcontentree's third-quarter sales this year recorded 195.7 billion KRW, a 110% increase compared to the same period last year. Sales surged significantly as the U.S. production company Wiip, acquired in the first half of this year, along with domestic production companies Climax Studio and Production H, were reflected in the results.

However, operating losses continued during the same period, amounting to 30.1 billion KRW. The poor performance of both the broadcasting and theater divisions translated into the financial results. The broadcasting division posted an operating loss of 4.7 billion KRW, falling short of Daishin Securities’ forecasted operating profit of 4.9 billion KRW. Kim Hoe-jae, a researcher at Daishin Securities, analyzed, “In the third quarter, with the underperformance of major productions, the simultaneous release of works on Over-The-Top (OTT) platforms was subject to accelerated amortization over 6 months instead of 18 months, leading to losses.”

In the case of theaters, an operating loss of 16.1 billion KRW was recorded. This also fell short of the forecasted operating loss of 9.6 billion KRW. For some works such as Mogadishu, the initial distribution fees?payments made to distributors and producers from ticket sales?were set high to encourage releases and then reduced later, resulting in a 60% increase in audience numbers compared to the second quarter. Nevertheless, the scale of losses remained similar.

However, profits are expected to improve from next year. Original works such as “Now, We Are Breaking Up,” “Annarasumanara,” “Money Heist,” and “The Good Family” are expected to improve the profitability of domestic production subsidiaries. Additionally, simultaneous releases on Disney’s OTT platform Disney+ have been planned. Wiip is also preparing to produce dramas to be aired on Amazon Originals and HBO Max, making a turnaround to profitability possible from the second half of next year.

Researcher Kim said, “The broadcasting division is expected to expand in scale after initial growing pains,” and added, “Theater operations will also improve not only food and beverage (F&B) sales but advertising revenue by operating auditoriums where eating and drinking are allowed starting this month.”

Accordingly, Daishin Securities maintained its investment opinion of ‘Buy’ on Jcontentree with a target price of 67,000 KRW. The closing price on the 5th was 62,000 KRW.

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