[Click eStock] "Contentsree Joongang, Performance Normalization Expected This Year"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained a buy rating and a target price of 39,000 KRW for Contentsree Joongang on the 13th, stating that although the fourth quarter of last year fell short of consensus estimates, this year's performance is expected to normalize.

Contentsree Joongang's fourth-quarter sales recorded 250.4 billion KRW, up 14% year-on-year, but operating loss was 21.6 billion KRW, falling short of the estimated 6.7 billion KRW.

Sales in the broadcasting sector decreased by 11% to 164 billion KRW, with an operating loss of 21.8 billion KRW. The decline in sales was due to a reduction in captive broadcast episodes. The main factor for the expanded deficit was identified as not only the increased losses of the subsidiary WIP but also a one-time cost of 6 billion KRW related to rights impairment.

The theater sector's sales increased by 78% to 58.4 billion KRW, and operating profit turned positive to 100 million KRW. Despite poor attendance in October and November last year, the movie Avatar succeeded at the box office in December. Additionally, increased demand for special theaters led to a rise in the average ticket price (ATP).

This year's confirmed lineup includes 12 captive productions, 10 original online video service (OTT) productions, 3 seasonal series, and 9 movies, totaling 34, which is more than last year's 32. Anticipated first-quarter releases include Casino 2, Daewoe-bi, and Sacred Divorce.

Contentsree Joongang's performance is expected to normalize this year. Sales are projected to increase by 16% to 993.4 billion KRW, and operating profit is expected to turn positive at 28.2 billion KRW.

Ando-young Ahn, a researcher at Korea Investment & Securities, explained, "The most important factor in broadcasting is the reduction of WIP's deficit. The currently confirmed lineup includes 3 productions, with 2 additional potential lineups, providing sufficient room for deficit improvement compared to last year."

He added, "The endemic effect is being fully reflected in theaters, and with anticipated releases such as Spider-Man, Transformers, and Crime City 3, audience numbers are expected to recover and operating profit to turn positive. The performance of Playtime, acquired in November last year, will also begin to contribute to profits as it is fully reflected."