[Click e Stocks] "CJ ENM, Focus on Core Business Normalization... Target Price Up"

On the 9th, KB Securities raised the target price for CJ ENM from 75,000 won to 80,000 won, citing normalization of its core business. The investment rating was maintained at 'Buy.'

Choi Yong-hyun, a researcher at KB Securities, explained, "We raised next year's operating profit margin for TVING by 9 percentage points considering the leverage effect and reflected improvements in TV advertising profitability due to workforce efficiency, resulting in a 33.6% upward revision of the overall operating profit estimate for next year, which led to the increase in the target price. Although challenges remain, such as improving financial costs through asset securitization and normalization of the U.S. subsidiary, attention should be paid to the fact that the core business has normalized."

CJ ENM recorded sales of 1.1 trillion won in the third quarter of this year, down 5.7% year-on-year, and operating profit of 7.4 billion won, achieving a turnaround to profitability after three quarters. Researcher Choi analyzed, "Cost efficiency in the media platform division showed results. Despite the off-season for advertising, the operating profit excluding TVING in the media platform division improved by 15 billion won compared to the previous quarter, which was influenced by reduced labor costs, and this effect is expected to continue."

CJ ENM's subsidiary TVING plans to actively pursue monetization next year. Plans include price increases for subscription plans, advertising plans, and free real-time broadcasting of major channels. Researcher Choi said, "TVING's operating expenses are about 110 billion won per quarter, with a high proportion of fixed costs. Future revenue growth from subscription price increases and advertising plans will lead to improvements in operating profit." He added, "There are more factors that will improve CJ ENM than worsen it, so the stock price is now expected to trend upward."

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