'Record-Breaking Performance Streak' Advertising Stocks' Target Prices Raised Consecutively

Despite KOSPI Decline...
Cheil Worldwide Rises 6.83% in One Month
Innocean Also Holds Up with 1.34% Gain

Industry "Clear Earnings Improvement Expected"
Related Stocks' Target Prices Raised Continuously

[Asia Economy Reporter Park Jihwan] Major domestic advertising companies such as Cheil Worldwide and Innocean are on track to achieve their highest quarterly performance ever in the third quarter of this year. This is due to the increase in digital advertising combined with the marketing effects from the launch of new products by key advertisers. The securities industry is raising target stock prices one after another, anticipating a clear upward trend in the advertising sector's performance.

According to the Korea Exchange on the 22nd, Cheil Worldwide's stock price rose 6.83% over the past month from the 17th of last month to the day before yesterday. Innocean also increased by 1.34%. Considering that the KOSPI, the market benchmark, declined by 4.24% during the same period, these companies showed a relatively strong upward trend even in a falling market. Their stock price resilience is attributed to their steady performance growth, unlike most companies experiencing the base effects of COVID-19.

According to financial information provider FnGuide, Cheil Worldwide's operating profit for the third quarter is expected to reach 68.4 billion KRW, a 15.2% increase compared to the same period last year. This marks the highest quarterly operating profit on record for the third quarter following the second quarter. Analysts note balanced growth across all business areas, including marketing for new products of major advertisers, expansion of agency operations in North America, and securing volume from non-affiliated clients. Kim So-hye, a researcher at Hanwha Investment & Securities, stated, "Marketing related to new product launches by major advertisers is showing strong performance in both media and digital sectors," adding, "Operating profit for the fourth quarter is also expected to increase by 23% year-on-year, setting a new record."

Innocean is also expected to achieve its highest quarterly performance ever in the third quarter. Innocean is projected to record sales of 327.7 billion KRW and operating profit of 35.6 billion KRW in the third quarter, representing increases of 16.0% and 31.9% respectively compared to the same period last year. The launch of new vehicles by captive advertisers Hyundai Motor and Kia is expected to expand marketing activities both domestically and overseas. Lee Nam-soo, a researcher at Kiwoom Securities, forecasted, "The improvement in the Americas, which accounted for half of this year's performance, is expected to be further strengthened this year and next due to the year-end Ioniq 5 and next year's EV6 effects."

The securities industry is projecting further stock price increases for advertisers, citing clear performance improvements. Shin Young Securities raised the target price for Cheil Worldwide by 9.7%, from 31,000 KRW to 34,000 KRW. KB Securities and Hanwha Securities also raised Cheil Worldwide's target price to 32,000 KRW, a 3.2% increase. Hanwha Securities raised Innocean's target price by 6.7%, from 75,000 KRW to 80,000 KRW.