[Click eStock] "Cheil Worldwide 3-Month Stock Price Down 16%... Downturn Turnaround Expected"

DB Financial Investment maintained its target price of 26,000 KRW and a buy rating for Cheil Worldwide on the 2nd.

Cheil Worldwide showed results in line with market expectations, with a gross profit of 364.1 billion KRW and an operating profit of 53.4 billion KRW in the first quarter.

The headquarters' gross profit decreased by 6.2% year-on-year due to the economic downturn. Both domestic affiliated and non-affiliated advertisers reduced media spending, resulting in a 59.8% year-on-year decline in broadcast media revenue and a 38.4% decrease in new media revenue. Overseas performance was relatively favorable. The China (+19.8%) and North America (+46.1%) regions drove growth mainly through newly acquired non-affiliated advertisers.

A turnaround in the second half of the year is expected. Operating profit for the second quarter is forecasted to be 87.2 billion KRW, similar to the previous year. This is because growth is inevitably limited until the first half due to the economic downturn and efficiency improvements in domestic and overseas marketing budgets of major advertisers. However, North America is expected to grow due to newly acquired non-affiliated advertisers (such as Popeyes), and China is anticipated to sustain growth through ongoing advertising campaigns for automobile brand clients, making overseas subsidiary growth sufficiently possible. With continued efficiency improvements in labor costs and other selling and administrative expenses, a turnaround in operating profit is expected from the third quarter of this year.

Shin Eun-jung, a researcher at DB Financial Investment, said, "The stock price has fallen about 16% over the past three months, which we believe largely reflects concerns about earnings contraction in the first half of the year," adding, "Based on a 2023 dividend per share (DPS) of 1,150 KRW, the dividend yield is expected to be 6.2%."

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