[Click eStock] "CJ CGV, Resumption of Operations in China and Domestic Lineup Strengthening... Focus on Q3 Normalization"

[Asia Economy Reporter Eunmo Koo] Ebest Investment & Securities analyzed that for CJ CGV, attention should be paid more to whether normalization occurs in the third quarter rather than the second quarter deficit. The investment opinion and target price were maintained at ‘Neutral’ and 25,000 KRW, respectively.

On the 12th, Ebest Investment & Securities estimated that CJ CGV’s sales in the second quarter of this year would decrease by 69.4% compared to the same period last year to 147.3 billion KRW, and operating loss would turn to a deficit of 67.3 billion KRW, falling short of consensus. Hyunyong Kim, a researcher at Ebest Investment & Securities, stated in the report, “In the second quarter, Korea’s box office (B/O) dropped by 90% compared to the same period last year, and China’s market was almost non-existent. Meanwhile, Turkey, Vietnam, and Indonesia also experienced market declines of 70-80%, making a large-scale deficit inevitable.” However, he forecasted that the stock price direction would be determined by whether the business conditions normalize from July.

This month, there is an expectation as China’s business restarts and the domestic lineup is beginning to revive. Researcher Kim predicted, “The reopening of operations in China is currently in final coordination with authorities and is expected to be possible within June.” Meanwhile, he added, “The domestic lineup will also start to revive with releases such as ‘Onward’ on the 17th and ‘Alive’ on the 24th,” and “In July, major blockbusters like ‘Peninsula’ and ‘Deliver Us from Evil’ are scheduled, so market recovery expectations will gradually increase.”

The investment opinion and target price were maintained at ‘Neutral’ and 25,000 KRW, respectively. Researcher Kim explained, “The major countries’ box office markets showed no signs of recovery in the second quarter, and the recovery outlook from July is based on the premise that the planned major lineups will be released without any setbacks.”