[Click eStock] "Contentree Joongang, Expected Effects from Reopening and Playtime Acquisition"

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained a buy rating and a target price of 71,000 KRW on Contentree Joongang on the 5th, citing improved performance of Megabox due to reopening and expected effects from the acquisition of Playtime.

Contentree Joongang acquired Playtime Group, which operates indoor kids playgrounds, for 125 billion KRW, with the acquisition date set for November 25. Playtime operates a total of 190 locations, including 80 directly managed stores and 110 franchises domestically. Additionally, it operates 16 locations overseas. Compared to the second place operator with 44 locations and the third to fifth places with 13 to 15 locations, this is an overwhelming figure.

Playtime achieved sales of 59.8 billion KRW and operating profit of 7.2 billion KRW in 2019. Due to the impact of COVID-19, sales dropped to 26.6 billion KRW with an operating loss of 13.7 billion KRW in 2020, and sales were 34.2 billion KRW with an operating loss of 7 billion KRW in 2021, but performance has been recovering since May. In particular, the share of Champion, a brand with higher profitability than the existing Playtime, has expanded to 57%, and profitability is expected to improve rapidly along with the reopening effect.

Through the kids indoor playground business, Megabox is expected to transform from a movie theater to a space business operator. Megabox operates a total of 110 theaters nationwide, including 54 directly managed and 56 consigned theaters. Among the 54 directly managed theaters, 9 are located in large shopping malls such as Shinsegae and Starfield, and since 91% of Playtime’s 80 directly managed locations are also in large shopping malls, joint tenancy is expected in the future.

Furthermore, since the average seat occupancy rate of theaters was around 21% even before COVID-19, it is considered possible to convert some screening rooms in multiplexes into Playtime facilities. Kim Hoe-jae, a researcher at Daishin Securities, explained, "Due to the structure of theaters using two floors simultaneously for screening rooms and the increasing demand for playground equipment utilizing two floors such as zip lines and rock climbing in kids indoor playgrounds, significant synergy in space utilization can be expected," adding, "Synergies such as combining movie tickets with Playtime admission tickets, membership integration, and Playtime entry of Megabox F&B and Stem coffee brands are also considered possible."

Megabox’s operating profit was 25.9 billion KRW in 2017 and 39 billion KRW in 2019, but it recorded an operating loss of 70.9 billion KRW in 2021. Operating profit is forecasted to be 4.4 billion KRW this year, 17.5 billion KRW in 2023, and 30.6 billion KRW in 2024. With the added effect of Playtime, it is analyzed that the 2024 operating profit could exceed the highest level of 39 billion KRW in 2019, reaching the 40 billion KRW range.

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