[Click eStock] "Cheil Worldwide Lowers Earnings Estimates... Target Price Down"

Target lowered by 7.1% to 26,000 won
Profitability improvement efforts are positive
Expect momentum expansion in 2024

On the 31st, Eugene Investment & Securities lowered the target price for Cheil Worldwide by 7.1%, from 28,000 KRW to 26,000 KRW, following a downward revision of earnings estimates. The investment rating of 'Buy' was maintained. Cheil Worldwide's closing price on the 30th was 18,500 KRW.

Researcher Lee Hyun-ji of Eugene Investment & Securities stated, "Although the challenging business environment continues, it is positive that the company is defending its scale mainly through digital and non-affiliated sectors," adding, "steady acquisition of new advertisers and expansion of agency areas are sustaining growth, and efforts to improve profitability through strong cost control are also positive." She further added, "In 2024, various momentum such as sports events and small-scale local M&A will be sequentially revealed, raising expectations for simultaneous growth in earnings and stock price."

Cheil Worldwide's gross profit for the fourth quarter was 429.2 billion KRW, and operating profit was 76 billion KRW. Gross profit, commonly used in the advertising industry, is the figure obtained by subtracting the cost of sales from revenue. Gross profit increased by 4% and operating profit by 6% compared to the same period in 2022. Along with the earnings announcement, Cheil Worldwide set a goal of 5% sales growth and profitability defense for this year. Additionally, the company aims to expand its digital business and non-affiliated advertisers, and to discover new advertisers mainly in North America and China.

Researcher Lee said, "The headquarters' gross profit was 88.3 billion KRW, achieving net growth through the execution of year-end peak season campaigns by non-affiliated advertisers amid continued efficiency improvements in major advertisers' intensive marketing budgets," adding, "Overseas, Europe recorded four consecutive quarters of negative growth due to the impact of non-affiliated advertiser departures, showing weakness, but North America and China, driven by overseas subsidiaries, led the scale with increased agency volume for non-affiliated advertisers, recording 340.9 billion KRW."