[Click eStock] "CJ ENM Expects Annual Loss This Year... Target Price Down"

Hana Securities lowered the target price for CJ ENM from 90,000 won to 83,000 won on the 11th. This is due to the expected annual operating loss this year caused by continued sluggish performance. However, the investment opinion was maintained as 'Buy.'

CJ ENM recorded sales of 1.05 trillion won and an operating loss of 30.4 billion won in the second quarter. Compared to the same period last year, sales decreased by 12%, and operating profit turned to a loss. The deficit was much larger than the market consensus, which had already anticipated a loss (-9 billion won). A loss of 47.9 billion won occurred solely from TVING, worsening the performance compared to the first quarter.

Accordingly, Hana Securities forecasted that CJ ENM would turn to an annual loss this year. The previous annual operating profit forecast was revised from 45.4 billion won to -43.3 billion won. Above all, the U.S. content subsidiary 'Fifth Season' became the biggest variable. The simultaneous strike by writers and actors unions in the U.S., the first in 63 years, made it difficult to schedule programming within this year.

Additionally, advertising within the media platform and TVING are also not in a good situation. Advertising is expected to recover partially, but this is interpreted as a base effect due to the historically poor performance in the first half of the year. TVING is also expected to bear a considerable amortization burden in the short term.

Lee Ki-hoon, a researcher at Hana Securities, said, "Performance continues to fall short of expectations, and although we expected a reduction in amortization burden due to decreased production costs in the second half, we have once again lowered the earnings forecast due to the uncertainty in Fifth Season's programming." He added, "Operationally, advertising recovery, reduction of TVING's losses, and resumption of programming in the U.S. need to occur, but this is not easy in the short term." He further predicted, "Rather, the sale of non-core assets such as equity, real estate, and subsidiaries will be a bigger momentum."

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