[Click eStock] "CJ ENM's strong performance since the end of last year to continue in 2Q"

Company's Proposed Performance Targets Expected to Be Far Exceeded
Tving Subscribers Surpass 1 Million... Continued Investment Anticipated

[Asia Economy Reporter Minwoo Lee] CJ ENM is expected to continue strong earnings in the second quarter of this year, surpassing market consensus. This is attributed to the rapid recovery of TV advertising as consumer sentiment, suppressed by COVID-19, improves, along with reduced content amortization costs due to production cost efficiency strategies.

On the 3rd, Hana Financial Investment maintained a 'Buy' rating on CJ ENM and raised the target price by 7.1% to 225,000 KRW. The closing price the previous day was 167,900 KRW.

The expected performance for the second quarter of this year is sales of 877.6 billion KRW and operating profit of 84.4 billion KRW, representing increases of approximately 5% and 15% respectively compared to the same period last year. This is more than a 30% increase from the previous estimate of 65 billion KRW. The operating profit consensus of 75.9 billion KRW is also significantly exceeded.

Kihoon Lee, a researcher at Hana Financial Investment, explained, "TV advertising has recovered faster than expected due to pent-up consumption, and the trend of lower content amortization costs, resulting from efficiency strategies implemented since the second half of last year, is expected to continue for the time being. From the second half of the year, profits will grow further with the start of Studio Dragon's orders for Apple TV, which will be reflected in consolidated results, and the visibility of future global projects."

The expected operating profit for the media division in the second quarter is 44.8 billion KRW, projected to increase by 80% compared to the same period last year. The researcher noted, "This is a conservative estimate assuming CJ ENM's standalone operating profit is lower than in the first quarter. Even with this assumption, the annual forecast is 34% higher than the company's target."

Regarding TVING, investments aligned with subscriber growth are expected. It is estimated that the subscriber base already surpassed 1 million as of last month. The researcher said, "Original content tests are being conducted soon in all genres including drama, movies, variety shows, and sports (Euro 2020). After this process is completed, full-scale investments are expected based on performance and subscriber growth."