[Click eStock] CJ ENM, Commerce Slump... Target Price Downgraded

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 13th that it maintains a buy rating on CJ ENM but lowers the target price to 154,000 KRW. Although gradual improvements in Endeavor and TVING and strong performances in movies and music are expected, the simultaneous slump in commerce is anticipated to cause operating profit in 2022 to decrease by 10.7% year-on-year to 265.1 billion KRW. Additionally, it pointed out that the value of held stock equity has also declined due to the stock market downturn.

Namsoo Lee, a researcher at Kiwoom Securities, explained, "While adjusting the target price using the SOTP method, we maintain the buy rating because media and content sectors can resume growth from next year onward."

TVING, which is expected to continue content investments at a similar level of 200 billion KRW in 2022 and beyond, is in a situation where acquiring subscribers is more necessary than upselling subscription fees. The number of subscribers, which was flat in the first quarter, increased by about 300,000 month-on-month to 4.01 million MAU in June. Compared to 3.15 million in the same month last year, this is a 30% improvement. The effect of Paramount+ entering the market indirectly through TVING rather than direct entry appeared, and original content such as and gained momentum. In August, it plans to secure content diversity and subscribers by live broadcasting Lim Young-woong's Seoul concert.

Commerce needs to recover high-margin categories such as clothing due to reopening and overcome the decline in TV and digital shopping. The researcher said, "The third quarter reflects the seasonality of the home shopping off-season, and due to economic uncertainty, it seems difficult to be free from consumption contraction in discretionary consumer goods and durables such as home appliances and furniture."

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