[Click eStock] "Cheil Worldwide, Expected Record High Q4 Performance... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Hanwha Investment & Securities forecasted on the 19th that Cheil Worldwide will record its highest-ever performance in the fourth quarter following strong results in the third quarter of this year, and raised the target stock price from 31,000 KRW to 32,000 KRW. The investment rating was maintained as 'Buy.'

So-hye Kim, a researcher at Hanwha Investment & Securities, stated, "We raised the target stock price as we increased Cheil Worldwide's operating profit estimates for this year and next year by 5.2% and 3.8%, respectively, compared to previous estimates," adding, "Currently, Cheil Worldwide's 12-month forward price-to-earnings ratio (PER) is only 13 times. Considering that the business mix is being reorganized around digital and overseas markets, improving fundamentals, a valuation rerating is expected."

Cheil Worldwide's third-quarter results this year are estimated to have exceeded market consensus. Researcher Kim analyzed, "Cheil Worldwide's third-quarter results likely surpassed market expectations with a gross profit of 316.1 billion KRW and an operating profit of 70.1 billion KRW. The headquarters' gross profit increased by 7% year-on-year, and overseas gross profit showed balanced growth across all regions, estimated to have grown by 16.1%." In particular, North America's gross profit is believed to have continued growth of over 50% due to the expansion of digital agency services for major advertisers, and operating profit margin is expected to have reached a record high of 9.3% due to labor cost efficiency and expense reduction.

Hanwha Investment & Securities also predicted that Cheil Worldwide's fourth-quarter operating profit will increase by 23%, achieving the highest-ever performance. Researcher Kim analyzed, "Cheil Worldwide's digital business has recently expanded its scope from campaigns, dot-com site operations, and business-to-business (B2B) site management to e-commerce platforms, content production, and social influencer marketing," adding, "This expansion of major advertisers' agency domains is expected to sustain a high growth trend over the next 2 to 3 years." Based on successful references from handling major advertisers' volumes, new orders from non-affiliated advertisers are also expected to increase significantly.