With Corona Day 10... Theater Stocks Still 'Downcast'

Business Conditions Improve but... With Corona Backlash Still Unsettling
Ultimately, Content Drives Growth... Hollywood Blockbusters Set to Release This December

[Asia Economy Reporter Gong Byung-sun] It has been 10 days since the implementation of the With Corona policy, which signifies a phased return to daily life, but theater stocks remain sluggish. It is interpreted that growth momentum is somewhat lacking until a blockbuster capable of drawing large audiences to theaters is released.

According to the Korea Exchange on the 11th, CJ CGV's stock price fell 8.92% in November. Although the domestic stock market has been sluggish recently, the decline is significant even considering that the KOSPI fell 1.36% during the same period. Jcontentree, which operates Megabox, and Lotte Shopping, which operates Lotte Cinema, also dropped 7.14% and 2.86% respectively this month. As of 9:48 a.m. on the day, CJ CGV recorded 28,800 KRW, down 1.03%, Jcontentree 64,500 KRW, down 0.77%, and Lotte Shopping 101,500 KRW, down 0.49%.

Unlike the stock prices, the business conditions are improving. Since the With Corona policy was implemented on the 1st, audiences have been returning to theaters. According to the Korean Film Council, the total number of moviegoers from the 1st to the 10th of this month was about 2.56 million, already reaching half of last month's (5.19 million) level.

Nevertheless, it seems insufficient to attract investors' attention without With Corona results exceeding expectations. Except for the 1st, 7th, and 8th after the policy implementation, the number of COVID-19 confirmed cases still exceeds 2,000. Moreover, as of this day, the number of critically ill patients reached 473, a record high, raising concerns about a strong headwind.

Competition with online video streaming services (OTT) is also burdensome. When OTT initially benefited from the COVID-19 situation, the prevailing prediction was that audiences would eventually return to movie theaters. However, recently, OTT has demonstrated growing influence in the content domain, exemplified by Netflix's 'Squid Game' craze.

Theater stocks are expected to gain growth momentum more from content than simply escaping the COVID-19 era. In December, sequels to popular Hollywood series such as The Matrix and Spider-Man will be released. Kim Hoe-jae, a researcher at Daishin Securities, explained, "Since the business environment has normalized, the release of major Hollywood works is anticipated," adding, "With the effect of ticket price increases, a significant improvement in performance is expected."