[Click eStock] CJ ENM, Increased Cost Burden from TVING Originals... Target Price Down

[Asia Economy Reporter Kwon Jae-hee] NH Investment & Securities maintained its 'Buy' rating on CJ ENM on the 10th, but lowered the target price by 28% from the previous 250,000 KRW to 180,000 KRW.

CJ ENM's consolidated sales for the fourth quarter of last year recorded 995 billion KRW, and operating profit was 29.6 billion KRW. Sales increased by 5% compared to the previous year, while operating profit fell by 66% during the same period. This appears to be due to the poor performance of all divisions except the music sector, along with a one-time cost related to incentive payments (around 60 billion KRW).

NH Investment & Securities explained that the downward revision of CJ ENM's target price was due to the lowered media performance estimates. The 2022 TVING original lineup focused on high-budget tentpole projects, and the content budget (200 billion KRW) doubled compared to the previous year. Considering the increased cost burden compared to previous estimates, the performance estimates were revised downward.

However, the 'Buy' rating was maintained.

Researcher Lee Hwa-jung of NH Investment & Securities stated, "Amid recent concerns about the physical spin-off of the studio and disappointment over earnings guidance, the stock price has been sluggish, but we are reviewing measures to minimize shareholder value damage," adding, "Currently, the stock price has excessively reflected market concerns, so there is sufficient upside potential compared to the lowered target price."

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