[Click eStock] "Innocean, Expected Growth Scale Increase in the Second Half of Next Year"

[Asia Economy Reporter Oh Ju-yeon] Kiwoom Securities analyzed on the 14th that Innocean will increase its growth scale as large-scale events are held toward the second half of next year. Although it was difficult to balance sales and costs due to increased advertising market uncertainty caused by the novel coronavirus infection (COVID-19), it is expected that company-wide efforts will be enhanced and efficiency will be quickly restored in the future.

According to Kiwoom Securities, Innocean's gross profit for the fourth quarter of this year is expected to be 170.1 billion KRW, an increase of 11.4% compared to the same period last year, while operating profit is expected to decrease by 5.8% to 38 billion KRW.

Researcher Lee Nam-su said, "Marketing related to new car launches and the expansion of independent marketing for the premium Genesis line and the electric vehicle line Ioniq are expected to unfold in the future, and the top-line growth of captive advertising will continue."

He also predicted that steady growth in domestic media agency, recovery of overseas non-affiliated businesses, and improvement in Welcome Company's performance will drive mid- to long-term growth along with an increase in captive advertising.

Meanwhile, although the decrease in face-to-face (contact) marketing due to COVID-19 has been partially absorbed by a shift to digital, contact marketing is expected to revive next year.

Researcher Lee evaluated, "It was inevitably a negative factor for automobile advertising where the value of customer experience is reflected in consumption," and added, "In the year when the revival of contact marketing is expected, the resumption of more special small-scale non-media advertising (BTL) that enhances customer experience value will take place first, and as it enters the second half of the year, large-scale events will occur, increasing the growth scale."

Balanced growth is also expected by region, with notable improvements anticipated in Europe and the Americas, where marketing expansion by Hyundai and Kia Motors is expected.

Accordingly, Kiwoom Securities maintained its investment opinion of 'Buy' and target stock price of 80,000 KRW for Innocean.