[Click eStock] "CJ ENM, Establishing Foundation for Performance Improvement... Results to Show from Second Half"

[Asia Economy Reporter Kwon Jaehee] Daishin Securities maintained its 'Buy' rating and target price of 160,000 KRW for CJ ENM on the 5th.

CJ ENM's sales in the second quarter amounted to 1.2 trillion KRW, with an operating profit of 55.6 billion KRW. While sales increased by 31% year-on-year, operating profit decreased by 35% during the same period. By segment, broadcasting recorded 25.4 billion KRW, down 56% year-on-year, and shopping was 19.5 billion KRW, down 35%. The film segment turned to a loss of 4.1 billion KRW. The music division recorded 14.8 billion KRW, achieving a 590% growth compared to the same period last year.

Kim Heejae, a researcher at Daishin Securities, analyzed, "Broadcasting underperformed estimates by 30 billion KRW due to advertising contraction, and shopping fell short by 30 billion KRW due to sluggish handling volume, but music exceeded estimates by 10 billion KRW thanks to new album releases by in-house artists. However, non-operating expenses including rights impairment and merger & acquisition (M&A) costs of about 30 billion KRW led to a deficit."

However, broadcasting is expected to lead performance improvement in the second half. Content sales are projected to surge 260% year-on-year to 3.5 trillion KRW. Tving, a mid- to long-term investment point, is also on the rise. It is estimated to have increased from 2.3 million subscribers in Q4 last year to 2.5 million in Q3 this year. It is forecasted to reach 4 million subscribers in Q4 this year. This is attributed to the revival of Naver membership partnership benefits, annual subscription discount benefits, KT plan partnerships, and expansion of Tving original content. Tving will merge with KT Season, which has about 1 million subscribers, and ENM and KT plan to collaborate in subscriber recruitment, content production, and marketing. From 2023, Tving is expected to reach its break-even point and achieve a subscriber target of 8 million by the end of 2023.

Researcher Kim said, "The foundation for performance improvement in broadcasting and shopping has been laid, and we will be able to confirm this in numbers in the second half."

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