[Click eStock] "CJ ENM Lowers Operating Profit Forecast for This Year... Media and Commerce Business Slump"

[Asia Economy Reporter Hwang Yoon-joo] Hanwha Investment & Securities downgraded its operating profit forecast for CJ ENM on the 9th. However, it maintained a 'Buy' investment rating and lowered the target stock price to 90,000 KRW.

Kim So-hye, a researcher at Hanwha Investment & Securities, stated, "We have lowered this year's operating profit forecast by 21% compared to the previous estimate, reflecting the sluggish profits in the media and commerce sectors."

Researcher Kim explained, "The reason for the repeated downward revision of the profit forecast is the expected continuation of losses of approximately 40 to 50 billion KRW combined quarterly from Tving and Fifth Season in the fourth quarter. Despite the strong performance of the music business, which is steadily increasing profit levels, the sluggish profits in the media and commerce businesses are disappointing."

CJ ENM's third-quarter sales met expectations, but operating profit fell short of consensus due to weak profits in media and commerce. The media sector recorded an operating loss of 14.1 billion KRW, turning to a deficit. Considering Studio Dragon's profit of 18.9 billion KRW, the burden of increased production costs still persists. Commerce profits also decreased by 79% year-on-year due to a decline in TV handling volume and the fixed cost burden of transmission fees.

Researcher Kim forecasted, "This year's sales are expected to increase by 28% year-on-year to 4.54 trillion KRW, and operating profit is projected to grow by 45% to 165.2 billion KRW. With the full-scale launch of global content sales and anchor lineups of major productions accompanying channels and digital platforms scheduled, the top-line growth is expected to remain solid."

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