[Click eStock] "CJ CGV, More Concern Than Expectation... Maintaining 'Neutral'"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] On the 27th, IBK Investment & Securities gave a neutral investment opinion and a target price of 26,000 KRW for CJ CGV, which has suffered business setbacks due to the novel coronavirus infection (COVID-19).

In the third quarter, CJ CGV recorded consolidated sales of 155.2 billion KRW, a decrease of about 68.8% compared to the same period last year. Operating loss amounted to 96.8 billion KRW, turning to a deficit during the same period.

By business segment, the headquarters posted an operating loss of 43.3 billion KRW, continuing losses following last year and the previous quarter. China’s operating loss was 19.1 billion KRW, maintaining a deficit. Additionally, Vietnam recorded an operating loss of 5.5 billion KRW, Turkey 8.0 billion KRW, and Indonesia 9.2 billion KRW, all continuing deficits. 4DX posted an operating loss of 8.6 billion KRW.

Researcher Yonghee Park of IBK Investment & Securities said, “The downturn due to the elevation to social distancing level 2 is expected to continue,” adding, “Although improvement in fourth-quarter performance is anticipated with the recovery of theater operations in China, significant recovery remains difficult to expect due to the impact of COVID-19.”

Normal business operations are expected to be possible after the second half of next year. Although recent branch restructuring has begun, rapid restructuring is difficult, requiring additional funding. Researcher Park said, “It will still take time to expect a COVID-19 vaccine, and stock dilution due to a rights offering must be considered.”