Movie-Related Stocks Also Stirred by 'Top Gun' Box Office Success

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Movie-related entertainment stocks are gaining attention due to the success of the film Top Gun: Maverick. In particular, since movie-related stocks have suffered prolonged sluggishness due to the COVID-19 pandemic, there are forecasts that they will surpass the breakeven point for the year with the easing of social distancing and the release of successive hit movies.

Lotte Shopping is a representative example. The distributor of Top Gun is Lotte Entertainment (Lotte Cultureworks), which is a subsidiary of Lotte Shopping. Lotte Shopping’s stock price has risen more than 30% this year alone, amid expectations that the main business divisions will return to normal operations and turn profitable this year. Especially, the profit and loss improvement of Lotte Cinema due to the release of major films such as Top Gun: Maverick also had a positive effect.

Joo Young-hoon, a researcher at NH Investment & Securities, said, "The profit and loss improvement of Lotte Cultureworks, which was the most affected by COVID-19, is positive for Lotte Shopping’s performance," adding, "Since indoor multi-use facility dining was allowed from April 25, it is expected to turn profitable in June." NH Investment & Securities raised Lotte Shopping’s target stock price by 45% from the previous 100,000 KRW to 145,000 KRW.

Park Jong-dae, a researcher at Hana Securities, also analyzed, "Due to the increase in viewers following the easing of social distancing, Lotte Cultureworks is expected to reduce its operating loss by more than 20 billion KRW compared to the same period last year."

CJ CGV, the only company operating IMAX theaters domestically, is also considered a beneficiary of Top Gun. Starting with the release of Crime City 2 on May 18, and continuing with Top Gun: Maverick, which attracted a cumulative audience of 3.84 million, CJ CGV recorded 14.55 million viewers in May and 15.47 million in June, recovering to 80.6% and 67.7% respectively compared to the same months in 2019 before the COVID-19 pandemic. The total number of viewers in the second quarter of this year was 33.14 million. Additionally, the implementation of premium ticket pricing policies and the easing of social distancing allowing dining inside theaters contributed to a significant improvement in profitability, including concession sales.

Lee Hwan-wook, a researcher at IBK Investment & Securities, said, "CJ CGV’s consolidated sales for the second quarter of this year are expected to be 308.6 billion KRW, an increase of 90.2% compared to the same period last year," and analyzed, "In the second half of the year, Hollywood blockbusters such as Thor: Love and Thunder, Black Panther 2, and Avatar 2 are scheduled to be released consecutively, so the recovery of audience numbers is expected to be clear."

Attention is also focused on whether online streaming service (OTT) related stocks, which have been sluggish due to the easing of social distancing, will benefit. Although online streaming services (OTT), which benefited from the COVID-19 pandemic, are generally seen as competitors to movie-related stocks, movies that first succeed at the box office also tend to be popular on OTT platforms. The producer of Top Gun is Paramount, and in Korea, TVING has been providing Paramount+ service since June 16. TVING is a subsidiary of CJ ENM, which is also considered a beneficiary stock.

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