[Click eStock] Innocean Expected to Miss 1Q Operating Profit Estimates Due to One-Time Expenses

[Asia Economy Reporter Hwang Yoon-joo] SK Securities maintained its 'Buy' rating and target price of 75,000 KRW for Innocean on the 31st, forecasting that the company's operating profit for the first quarter of this year will fall short of expectations.

Nam Hyo-ji, a researcher at SK Securities, stated, "We expect gross profit to be 149.4 billion KRW (YoY 7.1%), operating profit to be 20.5 billion KRW (YoY 1.3%), and net income attributable to controlling shareholders to be 13.8 billion KRW (YoY 11.1%). Operating profit is expected to fall short of the consensus estimate of 25.7 billion KRW."

Researcher Nam explained, "The sales proportion from the Russia and Ukraine regions is minimal, so the impact on performance is limited. However, the burden of selling and administrative expenses has increased due to the hiring of personnel related to the North American digital business and fees paid from equity acquisitions."

He also anticipated that the acquisition of shares in Studio Lennon, a visual effects (VFX) specialist company, is expected to strengthen the portfolio of non-affiliated advertisers.

Nam said, "This acquisition is expected to secure capabilities in AR/VR and digital content production and expand the portfolio of non-affiliated advertisers. As branding demand from major advertisers is expected to increase significantly from this year, realizing synergy between the existing Innocean corporation and the newly acquired companies is an important task."

He added, "Since the company has a structure capable of handling advertising planning, production, and various media agencies from traditional to digital media, strengthening digital capabilities is expected not only to secure additional orders from major advertisers but also to steadily attract non-affiliated advertisers in the North American region, where the sales proportion is high."

He continued, "Although advertisers' budget execution is somewhat slow in the first quarter, both affiliated and non-affiliated spending are expected to increase from the second quarter, showing a renewed profit growth trend."

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