"Start of Consecutive Releases of Major Works... Recommended to Increase Movie and Theater Stock Holdings"

Shinhan Financial Investment Report

On the 8th of last month, a movie theater in Seoul was crowded with viewers. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Myunghwan Lee] Recently, as major films have been consecutively released in domestic theaters, securities firms have advised increasing the proportion of stocks related to movies.

On the 4th, Shinhan Financial Investment stated, "From April 18, eating and drinking inside theaters have been permitted, and domestic and international film lineups that were postponed over the past two years are being released one after another," offering this advice.

It is analyzed that movie-related stocks have ridden an upward trend as indefinitely postponed films are being released one after another. Starting with 'Doctor Strange 2' on the 4th of last month, followed by the currently successful 'Crime City 2' released on May 18, and 'Jurassic World' released on the 1st, Shinhan Financial Investment pointed out that these films are performing well. As of the 1st, the domestic box office recorded 14.7 billion KRW and 1.46 million viewers, marking the highest figures since the COVID-19 pandemic outbreak in 2020.

Shinhan Financial Investment forecasts that domestic multiplex companies will achieve improved earnings due to the rapid recovery of audience numbers and cost reductions. They explained that the number of viewers is naturally increasing due to domestic and international film releases. Theaters have significantly adjusted their staff and fully introduced kiosks (unmanned terminals) to actively reduce costs. Although a minimum number of staff must be replenished due to the sharp increase in viewers, the cost level, which has drastically decreased compared to the past, is expected to be maintained.

They also estimated that CJ CGV and Megabox (Contentsree Central) are highly likely to surpass their break-even points in May. The timing of turning profitable on a quarterly basis is also expected to be gradually advanced. This is attributed to factors such as increased movie ticket prices, rising audience numbers, and cost reductions. Since many films are scheduled for release by the end of the year, box office event trading utilizing release schedules is expected to continue.

Jiin Hae, Senior Researcher at Shinhan Financial Investment, advised, "It is certain that the point at which movies reach profitability has accelerated," adding, "It is a good time to continuously aim for trading in movie-related stocks."