[Click eStock] Cheil Worldwide, The Time When Stock Price Reacts to Earnings

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 6th that it maintains a buy rating and a target price of 35,000 KRW for Cheil Worldwide.

Cheil Worldwide demonstrated efficient responses to the advertising market uncertainties caused by COVID-19, achieving record-high performance last year and proving its resilience once again. However, its stock price has shown a sluggish trend, currently trading at a price-to-earnings ratio (PER) of about 12.5 times based on 2022 estimated earnings.

Namsoo Lee, a researcher at Kiwoom Securities, explained, "Considering the expansion of major advertisers' portfolios, growth in North American agencies, expected synergy from rapid digital transformation, and the low risk of sharp advertising market downturns like those seen at the beginning of COVID-19, we maintain our buy rating."

It is estimated that the fourth quarter will record a gross profit of 339.8 billion KRW (yoy +11.1%) and an operating profit of 65.4 billion KRW (yoy +6.9%, OPM 7.7%), which falls short of market expectations.

Domestic GP is expected to show a favorable trend with 89.1 billion KRW (yoy -2.0%), while overseas GP is projected to achieve 250.7 billion KRW (yoy +16.7%), indicating a resolution of advertising market uncertainties caused by COVID-19.

Additionally, the demonstrated capability for efficient cost control is expected to continue in the fourth quarter, contributing to profitability improvement in 2021. In particular, North America among overseas regions is expected to grow by 48%, entering the era of 100 billion KRW in gross profit, and along with Europe and China, it is anticipated to receive greater attention as a key business region for the company.

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