[Click eStock] "Cheil Worldwide Achieves Best Quarterly Performance"

Balanced Growth in Both Domestic and Overseas Divisions
Daishin Securities "Raising Cheil Communications Target Price from 31,000 KRW to 34,000 KRW"

(Provided by Daishin Securities)

[Asia Economy Reporter Gong Byung-sun] In the second quarter of this year, Cheil Worldwide achieved its highest quarterly performance ever. The company showed balanced growth not only at its headquarters but also in overseas markets.

According to Daishin Securities on the 27th, Cheil Worldwide's operating profit in the second quarter increased by 34% year-on-year to 72.1 billion KRW, and the operating profit margin rose by 2.4 percentage points during the same period to 22.8%. The operating profit is the highest level across all previous quarters and exceeds market consensus by approximately 2.85%. The operating profit margin also achieved the highest margin since 2012.

It is interpreted that the highest level of performance in the second quarter was due to balanced growth in both the headquarters and overseas divisions. The headquarters' gross profit (sales minus cost of sales) recorded 87.9 billion KRW, a 17% increase compared to the same period last year. Kim Hoe-jae, a researcher at Daishin Securities, explained, “The volume of mobile phone and home appliance marketing agency services for major advertisers has continuously increased, achieving the highest growth rate since 2012.”

The overseas division's gross profit recorded 230 billion KRW, a 22% increase compared to the same period last year. Regions such as Europe and Latin America, which experienced negative growth in the first quarter, achieved positive growth in the second quarter, with all regions except the Middle East showing growth. Europe, which had a 5% negative growth until the previous quarter, turned to 25% positive growth in the second quarter. The North American region grew by 63% in the second quarter following 28% growth in the first quarter. Researcher Kim said, “We are continuously securing marketing volumes from major advertisers by collaborating with subsidiaries such as IRIS and TBG.”

The digital transformation aligned with market trends is also interpreted as contributing to growth. The digital proportion in the second quarter was 49%, an increase of 6 percentage points compared to the end of last year. Researcher Kim explained, “The non-face-to-face environment continues, and interest in digital marketing is steadily increasing, with related demand being sufficiently accommodated.”

Accordingly, Daishin Securities maintained a ‘Buy’ investment rating for Cheil Worldwide. The target stock price was raised from the previous 31,000 KRW to 34,000 KRW. The closing price on the previous day was 25,050 KRW.