[Click eStock] "CJ CGV, Slow Recovery in Theater Sales... Target Price Down"

Daishin Securities announced on the 25th that it has lowered the target price for CJ CGV from 13,000 KRW to 10,000 KRW. The investment rating was maintained at 'Buy.'

CJ CGV is estimated to have recorded sales of 420 billion KRW (consolidated basis) and an operating profit of 30.8 billion KRW in the third quarter. Compared to the same period last year, sales increased by 3%, and operating profit grew by 298%. It is estimated to have earned about 16.3 billion KRW in operating profit domestically and about 6 billion KRW in profit in China. Vietnam and Indonesia are believed to have maintained profits of around 2 to 3 billion KRW each.

CJ CGV's rights offering was successfully completed at 420 billion KRW. The court approval for the in-kind contribution of CJ OliveNetworks is still pending. Even if the value of CJ OliveNetworks is somewhat undervalued in this process, the debt ratio is expected to improve significantly from 1052% in the second quarter to around 370%.

Kim Hoejae, a researcher at Daishin Securities, said, "CJ CGV theaters are operating normally, and the released films are mainly series or blockbusters," but added, "However, due to hesitation from consumers who have not visited theaters in the past three years, related performance is slowly recovering." He continued, "Thanks to cost reductions implemented over the past three years, profits relative to sales are expected to recover quickly."