[Click eStock] "ContentreeJoongAng Expected to Rebound on Improved Subsidiary Performance"

On January 28, DS Investment & Securities maintained its "Buy" investment rating and a target price of 14,000 won for ContentreeJoongAng.

Jang Ji-hye and Kang Tae-ho, researchers at DS Investment & Securities, stated, "Recently, ContentreeJoongAng's share price has fallen sharply due to concerns over financial burdens. While there are clear short-term financial pressures such as poor theater performance, convertible bond repayments, and delays in the SLL listing, the company has also secured signs of a rebound, including improved subsidiary performance in 2026 and structural reorganization through M&A."

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They predicted that last year's fourth-quarter earnings would fall short of market expectations. Specifically, they forecast consolidated sales of 264.4 billion won and operating profit of 1.5 billion won, which would not meet the expected 6.4 billion won. In the broadcasting segment, the number of scheduled episodes decreased by two to 34 compared to the previous year, but the advance sales to global OTT platforms led to a higher recoupment rate (production cost recovery rate), which is expected to improve performance. For consolidated subsidiaries, the results will reflect Studio Slam's airing of "Black & White Chef 2" and Encore idol group CloseYourEyes' release of their third mini-album (with 570,000 copies sold in the first week). However, as the delivery of "The Undertow" by overseas production subsidiary Wiip has been postponed to this year, the results are expected to fall short of expectations. In the theater segment, the total domestic box office in the fourth quarter last year reached 310.8 billion won. The strong performance of "Avatar: The Way of Water," which had a high proportion of screenings in premium theaters, along with increased market share at directly operated locations and relief in fixed costs, is expected to improve profitability.

For this year, they forecast ContentreeJoongAng's consolidated sales at 1.2 trillion won and operating profit at 35.1 billion won. In the broadcasting segment, the company is expected to maintain a trend of higher recoupment rates through the production of 10 captive titles and advance sales to OTT platforms. Additionally, five Wiip-delivered titles, five OTT original titles, five Plus M investment and distribution titles, and five Studio Slam variety shows are planned, along with Encore CloseYourEyes' concert, which is expected to expand IP revenue. They added, "In the theater segment, the stagnation of the domestic box office is expected to be offset by a reduction in fixed costs, narrowing losses. As Lotte Shopping announced that the exclusive negotiation period for the merger between Megabox and Lotte Cinema has been extended until March 31 this year, business restructuring and performance improvement through the merger are also anticipated going forward."

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