[Click eStock] "CJ CGV, Full-Scale Profitability Improvement... New Target Price Set at 7,000 Won"

Operating Cash Flow Expected to Improve Significantly
Operating Profit Likely to Exceed 100 Billion KRW This Year
Low Possibility of 'Overhang'

On the 5th, KB Securities newly issued a 'Buy' rating and a target price of 7,000 KRW for CJ CGV. The previous closing price of CJ CGV was 5,850 KRW.

Choi Yonghyun, a researcher at KB Securities, stated, "With the inclusion of CJ OliveNetworks and the improvement in operating cash flow due to an increase in the number of viewers, it is expected that interest-bearing debt will be reduced from the second half of 2024," adding, "Investment points include ▲an increase in audience due to qualitative improvement of content ▲growth of global business ▲diversification of content and expansion of space business ▲improvement in profitability through fixed cost leverage and inclusion of CJ OliveNetworks."

The domestic box office audience is expected to reach 130 million in 2024 and 132 million in 2025. The overseas theater business is expected to have higher growth potential due to lower theater penetration rates compared to domestic markets. Additionally, CJ CGV plans to diversify content through concerts by famous artists, fan meetings, baseball broadcasts, and increase the proportion of non-film sales by enhancing space utilization.

Researcher Choi projected CJ CGV's operating profit to be 111.3 billion KRW in 2024 and 154.2 billion KRW in 2025, stating, "Since CJ CGV has a large interest burden, net income attributable to controlling shareholders is considered a more important indicator than operating profit, and this is expected to turn positive from 2025." Potential risk factors for CJ CGV include a high debt ratio and concerns about overhang (potential sell-off volume). However, it is analyzed that interest-bearing debt will be reduced from the second half of the year, and the conversion price of convertible bonds is high, lowering the possibility of overhang.

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