Theater Stocks Hit Bottom... 'Gesture' to the Audience

Rising Expectations for Recovery as Domestic and International Discussions on 'With Corona' Begin

On June 13th, students are purchasing tickets to watch a movie at CGV Yongsan I'Park Mall in Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Minwoo Lee] The film industry, which has endured its worst period due to the prolonged spread of COVID-19, is increasingly optimistic about benefits with discussions around 'with COVID' measures. Although there is still a long way to go, analyses suggest that the bottom has passed and a full recovery is expected.

On the 19th, Samsung Securities explained that, given this background, it is necessary to pay attention to film-related stocks such as Jcontentree and CJ CGV. Although the recent spread of the COVID-19 Delta variant remains a variable, the prolonged pandemic has increased global fatigue and suppressed economic activities, leading to active discussions about 'with COVID' measures. Minha Choi, a researcher at Samsung Securities, stated, "The film industry was one of the sectors hit hardest by the COVID-19 pandemic, and entering the 'with COVID' era, a full recovery is anticipated. Especially since it is an offline cultural consumption activity that can be easily started within daily life at a low cost, it can quickly benefit."

They also foresee a spring for movie theaters. Despite ongoing strict social distancing measures, new releases in July and August have revitalized the market. Unlike last year, when new releases were postponed, this year Hollywood blockbusters from the U.S. are no longer delaying and are setting release dates. Provided the market situation does not worsen significantly, various content capable of boosting theater attendance is expected to be screened domestically and internationally.

Already, the three major domestic multiplex chains and the paid broadcasting industry implemented their own discounts in July and August to encourage domestic production and distribution companies hesitant to release films. As early as the end of next month, the Korean Film Council is expected to distribute 1.67 million discount tickets worth 6,000 won each, totaling around 10 billion won, through supplementary budgets to support the film industry. China has also resumed new releases this month. During the National Day golden holiday period, highly funded anticipated films are scheduled to be released.

These movements have led to analyses that the 'bottom' has been passed. Although the theater market's growth rate compared to the same period last year is sharply rising, it still falls short of the pre-COVID year 2019. Even after overcoming the pandemic, structural market changes such as the rapid rise of digital content platforms like Over-The-Top (OTT) services make it difficult to return to previous levels. Nevertheless, the current situation, with the full-scale implementation of 'with COVID' and successive new releases, is described as a sign of recovery from the bottom. Researcher Choi recommended Jcontentree, expecting improvements in film sector performance and a revaluation of broadcasting business value. However, CJ CGV, which operates only cinema businesses in several countries, is expected to have a much larger rebound when the market recovers, so while short-term sharp rises are possible, the investment opinion remains 'Neutral (HOLD)' considering financial burdens.