[Click eStock] CJ ENM, Short-term Profitability Slowdown... Target Price Downgrade

[Asia Economy Reporter Hwang Yoon-joo] On the 11th, KB Securities maintained a 'Buy' rating on CJ ENM despite short-term profitability deterioration, but lowered the target price to 195,000 KRW.

Choi Yong-hyun, a researcher at KB Securities, stated, "While sales growth is favorable due to strengthened content competitiveness and aggressive digital-related investments, profitability burden is increasing," and added, "Considering a conservative operating profit guidance, we have lowered the 2022 operating profit estimate by 19.7% compared to the previous forecast."

Researcher Choi explained, "Amid ongoing aggressive M&A and content investments domestically and internationally, total production costs in 2022 are expected to rise significantly to 860 billion KRW (estimated around 600 billion KRW in 2021)," and continued, "Tving is also investing 200 billion KRW in production costs aiming for 4 million subscribers, 100% sales growth, and break-even point achievement, which will exceed the 2021-2023 investment guidance of 400 billion KRW."

He added, "The media sector will continue to be a core growth driver following last year," and said, "Even considering short-term profitability decline, Tving's market share expansion and securing original content will be the key growth foundation in the mid to long term."

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