[Click eStock] J Contentree, Disappointing Earnings but Rich Content Lineup 'Recovery Expected'

[Asia Economy Reporter Lee Seon-ae] NH Investment & Securities announced on the 7th that it maintains a buy rating and a target price of 73,000 KRW for Jcontentree. Although the first quarter continued to show losses and the performance was disappointing, in the short term, the recovery of theaters due to the transition to endemic can be expected to accelerate, and in the mid to long term, it is a time to focus on the growth momentum brought by strengthened global negotiation power following consecutive content hits.

NH Investment & Securities estimated Jcontentree's consolidated sales for the first quarter of this year to be 172.2 billion KRW, a 43% increase compared to the same period last year, and an operating loss of 7.4 billion KRW, continuing the deficit from the previous year. The operating profit was analyzed to be below market estimates, mainly due to PPA amortization expenses and delayed theater recovery.

The expected operating profit for the broadcasting division was forecasted to decrease by 33% from the previous year to 10.2 billion KRW. Researcher Lee Hwa-jung of NH Investment & Securities explained, “The number of captive market broadcasts in the first quarter was similar to the same period last year at 61 times, and revenue related to the Netflix original ‘Now at Our School’ will be fully recognized,” adding, “Regarding PPA amortization expenses, it was previously estimated to be recognized temporarily in the fourth quarter, but it will be allocated quarterly (4.1 billion KRW).”

The theater division is expected to record an operating loss of 17.1 billion KRW. The researcher noted, “Due to the impact of Omicron, the release schedule of major films has been postponed again, and operating hours have been shortened, causing ongoing operational disruptions,” and added, “As discussions on the transition to endemic accelerate, we can expect a recovery in performance starting with the release of the Hollywood blockbuster ‘Doctor Strange 2’ during the May holidays.”

However, mid to long-term growth is emphasized as promising. In the content division, Netflix originals ‘Now at Our School’ and ‘Hellbound’ have achieved global box office success, and the release of ‘Annarasumanara (6 episodes)’ is confirmed for early May. Various works such as ‘Money Heist: Joint Economic Area,’ ‘Suriname,’ ‘Model Family,’ and ‘Casino’ are also in the pipeline. The researcher explained, “This period strengthens the reference for hits and solidifies the position as a global production company,” adding, “There is also a valid possibility of securing additional revenue due to the normalization of exports to China.” The theater division is expected to normalize its operating environment in the second half of the year. The researcher emphasized, “Accordingly, the target price calculation base has been changed to 2023, which can fully reflect the operating value of the theater division.”

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