[Click eStock] No Hit Movies Amid Depressed Market... CJ CGV's Continued Slump

Moderate Recovery Expected This Year... Overseas Demand Including China Also Rebounds

On the 26th, CJ CGV suspended operations at seven locations: Daehakro, Myeongdong Station Cine Library, Deungchon, Yeonsu Station, Hongseong, Daegu Academy, and Gwangju Geumnam-ro. CGV explained that it was unavoidable to halt operations at some theaters in order to overcome the business difficulties caused by the prolonged COVID-19 pandemic. The photo shows CGV Myeongdong Station Cine Library on that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] CJ CGV is expected to post weak results again in the first quarter of this year. This is attributed to the postponement of major anticipated film releases due to the resurgence of COVID-19 and the continued decline in audience numbers caused by strengthened social distancing measures.

On the 5th, Meritz Securities forecast that CJ CGV will record sales of 156.8 billion KRW and an operating loss of 62.5 billion KRW in the first quarter. Compared to the same period last year, sales are expected to decrease by 35.6%, and the deficit is expected to shrink by about 12.7%. The number of domestic viewers in the first quarter is projected to be 8.2 million, slightly down from 9.67 million in the fourth quarter of last year. Researcher Jisoo Jung of Meritz Securities stated, "Due to some asset impairments related to domestic sites and valuation losses from decreased corporate value in China, Vietnam, and Indonesia, the net loss for the period is expected to increase significantly to 320.3 billion KRW."

However, a gradual recovery is anticipated for the entire year. Consolidated sales for this year are estimated at 978.4 billion KRW, with an operating loss of 73.8 billion KRW. Sales are expected to increase by 67.7% compared to last year, and the deficit is projected to decrease by 81.2%. The film "Minari," released on the 3rd, attracted over 40,000 viewers on its opening day, and the releases of "Seobok" in April and "Black Widow" in May are expected to boost the currently sluggish audience demand.

Overseas demand is also recovering. During the seven-day Lunar New Year holiday in China, the box office recorded 7.82 billion yuan (approximately 1.3588 trillion KRW), a 32.5% increase compared to the 5.91 billion yuan box office during the 2019 Lunar New Year period before COVID-19. Researcher Jung explained, "The pent-up consumer demand recovery trend in China is expected to continue throughout this year," adding, "In Vietnam, the screening of delayed anticipated films has resumed since March, so a gradual recovery in overseas business overall is expected compared to last year."

Against this backdrop, Meritz Securities maintained a 'Hold' investment rating on CJ CGV and raised the target stock price by 12% to 28,000 KRW. The closing price on the previous day was 28,250 KRW.