Riding the Hollywood Blockbuster Wave... Will Jaycontentree Soar?

Hollywood Blockbusters to Premiere Starting This May
Global OTT Platforms Intensify Competition for Domestic Content Acquisition... Expectation of Rising Sales Prices for Works

[Asia Economy Reporter Gong Byung-sun] Attention is focused on whether Jcontentree will soar ahead of the consecutive theatrical releases of Hollywood blockbuster films. A rise in sales unit prices is also expected due to the favorable conditions in the broadcasting sector.

NH Investment & Securities evaluated that the theater sector has been recovering since the release of "Godzilla vs. Kong" at the end of last month. "Godzilla vs. Kong" recorded an opening revenue of $48.5 million, the highest among theatrical releases since COVID-19. This is even higher than the previous work, "Godzilla: King of Monsters." Lee Hwa-jung, a researcher at NH Investment & Securities, said, "There is a possibility of revenge consumption for Hollywood blockbuster theatrical releases," adding, "With the release of Fast & Furious 9 in May and Black Widow in July, the recovery of the theater business operated by Jcontentree, such as Megabox, will become visible."

The strengthening of competitiveness in the broadcasting sector is also a positive factor. As global online video services (OTT) intensify competition for domestic content acquisition, the sales unit price of Jcontentree's works, which have abundant global references, is expected to rise. Additionally, 400 billion KRW from the capital increase of its subsidiary has been injected, which is expected to expand the production of high-budget tentpole works in the future. Tentpole refers to productions with glamorous casting and huge production costs that usually determine the success or failure of the company. The researcher evaluated, "Under a favorable industry environment, it is the time for Jcontentree's prepared production capabilities to shine."

However, the first-quarter performance this year is estimated to fall short of expectations. NH Investment & Securities forecast Jcontentree's consolidated sales for the first quarter of this year to decline by 17% year-on-year to 85.4 billion KRW, with an operating profit of 14.1 billion KRW, expecting continued losses. The researcher explained, "In the case of theaters, the release timing of major works was generally postponed by one quarter, and the anticipated work 'Seobok' was simultaneously released on the domestic OTT TVING, dispersing demand," adding, "In broadcasting, the number of drama programming works for JTBC was expected to be about 18, but considering the current situation, it has decreased to 15-16 annually."

NH Investment & Securities raised the target price for Jcontentree from 40,000 KRW to 60,000 KRW. As the possibility of recovery in the theater industry increases, the target price was also raised. The investment opinion was maintained as "Buy."