[Click e-Stock] "CJ ENM, Profit Volatility Remains... Clearer Investment Points Needed"

"Significant Improvement in Operating Losses Unlikely"

On November 7, Hanwha Investment & Securities pointed out that “quarterly profit volatility remains high for CJ ENM due to investment costs for securing growth drivers and the burden of investments to strengthen overseas business,” adding, “It is a time when more distinct investment points are needed.”

Kim So-hye, an analyst at Hanwha Investment & Securities, made this assessment on the same day, maintaining a ‘Buy’ rating and a target price of 72,000 won for CJ ENM.

CJ ENM’s third-quarter results this year recorded 1.25 trillion won in revenue and 17.6 billion won in operating profit, falling significantly short of market expectations. In particular, the media platform segment posted an operating loss of 3.3 billion won. Analyst Kim explained, “Despite high viewership ratings and the popularity of major content, TV advertising sales decreased by as much as 27.1% compared to the same period last year.”

Looking at the performance by major segment, Tving recorded an operating loss of 16.1 billion won, continuing its sluggish trend. Analyst Kim analyzed, “The slow pace of subscriber growth and the ongoing burden of investment costs led to a large deficit.” In addition, the music segment’s operating profit was only 1.9 billion won, which was due to decreased activity from Japanese artists and increased investment costs for Mnet Plus. The US-based Studio Fifth Season (FS) posted an operating loss of 2.1 billion won, continuing to narrow its deficit.

Analyst Kim emphasized, “In the domestic online video service (OTT) market, competition is expanding beyond subscriber acquisition and advertising revenue growth to collaboration with external partners. The market has entered a mature phase, and we are at a stage where the dominance of a few players is being determined,” stressing the need for Tving to further clarify its strategy.

For the fourth quarter, original content such as ‘Transit Love 4’ and ‘Dear X’ is scheduled for release, so it will be necessary to monitor traffic. Analyst Kim stated, “Without a rebound in subscriber numbers and revenue growth, it will be difficult to significantly improve the current level of operating losses,” adding, “For the time being, the main momentum will depend on the global performance of Mnet Plus.”

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