[Click eStock] "Cheil Worldwide, Faster-than-Expected Earnings Recovery... Target Price Up 15%"

[Asia Economy Reporter Park Jihwan] KTB Investment & Securities evaluated that Cheil Worldwide is showing a faster-than-expected recovery in performance as of the 10th. Accordingly, they maintained the investment opinion of 'Buy' and raised the target price by 15.4% from the previous 26,000 KRW to 30,000 KRW.

Nam Hyoji, a researcher at KTB Investment & Securities, said, "the regional sentiment is better than expected," adding, "The North American region, where digital agency areas and regional expansion are happening simultaneously, is expected to continue high growth, with a 40.9% increase compared to the previous year." The agency items have recently expanded from the existing wireless-centered marketing agency to home appliances (Bespoke, TV) and laptops. If mergers and acquisitions (M&A) are completed within the year, additional performance upside is also expected.

Operating profit for the second quarter is expected to increase by 34.6% year-on-year to 72.4 billion KRW. Researcher Nam Hyoji said, "growth in the North American region is important this year," adding, "With an increase in volume for major advertisers, North American gross profit is expected to rise from 71.9 billion KRW last year to 101.4 billion KRW this year."

Non-affiliated executions are also recovering and expanding. In Europe, efforts are focused on developing non-affiliated advertisers centered on Iris, and there is also a goal to develop new global advertisers in connection with North America. In China, new local advertisers are being developed mainly in the automotive sector, and in the second half of the year, the resumption of marketing executions in sectors that reduced activities last year and the influx of advertisers due to the Beijing Winter Olympics at the end of the year are expected.

Expectations for M&A completion within the year are also emerging. Researcher Nam said, "The target is likely to be a company possessing digital capabilities focused on data and tech," adding, "They will proceed with acquisitions at the point when synergies become clear by jointly handling major advertiser agency volumes."