[Click eStock] "Incross, Q3 Operating Profit Expected to Rise 45% YoY... Performance Improvement Underway"

[Asia Economy Reporter Ji-hwan Park] Shinhan Financial Investment evaluated on the 15th that Incross is expected to see a 45% increase in consolidated operating profit in the third quarter compared to the previous year, indicating that the performance improvement trend is gaining momentum. They maintained a buy rating and a target price of 75,000 KRW.

Researcher Se-jong Hong of Shinhan Financial Investment stated, "The consolidated sales for the third quarter are expected to be 13.6 billion KRW, up 34.2% year-on-year, and operating profit is expected to increase by 45.4% to 5.9 billion KRW," adding, "The domestic advertising market, centered on digital, has significantly improved compared to the previous year." He also said, "Despite the base effect, video continues to show high growth," and "Explosive profit generation continues regardless of off-season or peak season."

The sales improvement of T Deal is also positive. The transaction volume is expected to increase by 22% from the previous quarter to 24.1 billion KRW. The explosive response to the T Deal gift function, which started in earnest from September, is being boosted by the Chuseok effect. The operating profit margin in the fourth quarter, entering the peak advertising season, is expected to rise to 45-50%.

In particular, in the rep (DA advertising) sector, sales capabilities and profit generation are concentrated among the top operators. It is analyzed that an oligopolistic market reorganized into the top three companies is expected, leveraging the unique cash flow characteristics of advertising. It is also explained that inorganic growth through small-scale mergers and acquisitions (M&A) as well as the accumulation of big data unique to DSP (Demand Side) are expected in the mid to long term.

Researcher Hong said, "Based on the improvement in the domestic advertising market led by digital, new business momentum such as T Deal and addressable TV, and the valuation attractiveness with a price-earnings ratio around 16 times, we suggest a low-price buying strategy," adding, "The range below a PER of 20 times is always seen as a good buying opportunity."