[Click eStock] "SBS, Undervalued Stock Despite Poor Earnings... Target Price Up"

KB Securities announced on the 10th that it is slightly raising the target price for SBS from 50,000 won to 51,000 won. Despite sluggish performance, it judged that the stock price is still undervalued compared to competitors.

SBS recorded sales of 388.5 billion won and operating profit of 36.1 billion won in the fourth quarter of last year. This represents increases of 33.4% and 9.3%, respectively, compared to the same period the previous year. While advertising and business segment sales both grew due to the World Cup effect, operating profit fell short of market expectations due to costs related to World Cup production and performance bonuses.

Annual sales this year are expected to decrease by 13.9% from last year to 1 trillion won, and operating profit is projected to fall to 96 billion won, about half of last year’s level. Overall, broadcasting advertising revenue is expected to decline by about 11% due to reduced advertising spending, and business sales are also expected to decrease by about 20% due to the base effect of large-scale broadcasting rights revenue that was recorded as a one-time item last year.

Choi Yong-hyun, a researcher at KB Securities, said, "We have lowered the 2023 net income attributable to controlling shareholders by 41.9% to reflect the decrease in advertising spending caused by the economic slowdown, but even considering the sluggish performance, SBS’s stock price remains undervalued compared to competitors. The IPO plan for the subsidiary StudioS is still undecided, so it is premature to reflect a holding company discount."