Stretching Movie Week... 'Content' Is the Key
Related Stocks Maintain Uptrend
Box Office Success of Anticipated Releases Determines Earnings
[Asia Economy Reporter Lee Jung-yoon] With a series of hit movies and the news of awards at the 75th Cannes Film Festival, movie stocks have recently been on an upward trend.
According to the Korea Exchange on the 2nd, CJ CGV closed at 28,000 KRW on the 30th of last month, up 8.11% from the previous trading day. On the same day, Showbox also rose 8.93% to 6,100 KRW, and Contentsree Joongang and NEW showed increases of 6.70% and 5.00%, respectively. This upward momentum continued on the day as well; as of 9:36 a.m., Showbox and NEW were up 0.49% and 1.11%, respectively. Contentsree Joongang also showed a 0.41% rise. However, CJ CGV fell 2.71% following news of issuing convertible bonds (CB) worth 400 billion KRW.
The sharp rise in movie stocks on the 30th of last month is analyzed to have been influenced by the box office success of the films Doctor Strange 2 and The Outlaws 2. As a result, the number of moviegoers in May is expected to exceed 10 million for the first time since January 2020, and it is also anticipated that the break-even point (BEP) will be achieved. Additionally, the awards at the Cannes Film Festival?Director Park Chan-wook winning Best Director for Decision to Leave and actor Song Kang-ho winning Best Actor for Hirokazu Kore-eda’s film Broker?also contributed to the rise in stock prices.
Experts agree that for movie stocks to maintain their upward trend, the release and success of anticipated films are ultimately important. Hyunji Lee, a researcher at Eugene Investment & Securities, explained, "Even if quarantine rules such as allowing eating and drinking are relaxed, people will not visit theaters if there is nothing worth watching. Looking at May alone, movie stocks performed well, but it remains to be seen whether this trend will continue in June and July."
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There were also opinions that long-term investment in movie stocks should be approached cautiously. Jinhae Ji, a researcher at Shinhan Financial Investment, said, "Reducing costs is not easy, so it is necessary to consider whether the valuation of the movie industry can be set high in the long term."
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