[Click eStock] "CJ ENM, 2024 Turnaround... Clear Profit Trend"

Q4 2023 Operating Profit Expected at 35.6 Billion KRW
Widening Performance Improvement Leads to Annual Profit Turnaround
Focus on TV Advertising, TVING, and Fifth Season Performance

Daishin Securities analyzed on the 19th that CJ ENM is expected to enter a clear profit trend this year. They maintained a 'Buy' investment rating and a target price of 82,000 KRW. CJ ENM's closing price on the 18th was 62,100 KRW.

Kim Hoe-jae, a researcher at Daishin Securities, stated, "CJ ENM's sales for the fourth quarter of 2023 are expected to be 1.3 trillion KRW, with an operating profit of 35.6 billion KRW," adding, "This indicates a clear shift into a profit trend." CJ ENM recorded operating losses of 50.3 billion KRW and 30.4 billion KRW in the first and second quarters of 2023, respectively. In the third quarter, it turned profitable with an operating profit of 7.4 billion KRW. The fourth quarter is expected to see an increase in profit scale, indicating entry into a stable trajectory.

Looking specifically at CJ ENM's fourth-quarter performance forecast, a gain of 140 billion KRW from the sale of Belief Lab is expected to be reflected. Additionally, goodwill impairment of 110 billion KRW occurred for Fifth Season, whose corporate value declined after Toho's investment. By business segment, operating profits are expected to be 6 billion KRW in the media platform, 19.4 billion KRW in music, and 29.3 billion KRW in commerce. Conversely, the film and drama segment is forecasted to record an operating loss of 18.2 billion KRW. The subsidiary TVING is estimated to have reached 4 million members by the end of 2023 and is expected to incur an operating loss of 29.5 billion KRW.

Researcher Kim said, "The three key points for CJ ENM's performance improvement this year are TV advertising improvement, and normalization of TVING and Fifth Season." TV advertising, which was the main cause of last year's performance deterioration, is expected to see increasing improvement in the second half of the year. TVING is projected to benefit more from subscriber growth due to professional baseball broadcasts. It is expected to surpass 5 million members by 2025. The ongoing merger with Wave, if completed, is also expected to result in cost reduction effects. Regarding Fifth Season, gradual normalization has been underway since December following the end of the Hollywood strike, and it is expected to supply more than 20 pieces of content annually, enabling a return to profitability. Fifth Season's expected operating profit for 2024 is 35 billion KRW.

Kim added, "In the music sector, ZeroBaseOne's debut in Japan, the Kep1er concert, and the girl group formed from I-LAND 2 are all scheduled to debut exclusively under ENM in the second half of the year," and forecasted, "CJ ENM is expected to return to profitability on an annual basis in 2024."

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