[Click eStock] "Contentsree Joongang, Profit Forecasted After 5 Years... Target Price Maintained"

Deficits for Four Consecutive Years Since 2020... Surplus Expected This Year
Megabox and SLL, Key Subsidiaries Leading the 'Turnaround'
Wiip, the Only Subsidiary Expected to Post Deficit, Aims for Higher Quarterly BEP in Second Half

Daishin Securities analyzed on the 15th that Contentree Joongang is expected to achieve profitability for the first time in five years. They maintained a 'Buy' investment rating and a target price of 21,000 KRW. Contentree Joongang's closing price on the previous trading day was 12,470 KRW.

Kim Hoe-jae, a researcher at Daishin Securities, stated, "Contentree Joongang's operating profit for 2024 is expected to turn positive at 36.4 billion KRW," adding, "(Subsidiary) SLL will post a profit of 35.4 billion KRW, Megabox 18.1 billion KRW, Playtime 7.8 billion KRW, while Wiip will incur a loss of 25 billion KRW."

Contentree Joongang turned to a loss with an operating loss of 58.8 billion KRW in 2020, following the pandemic. The loss amounts were 57.4 billion KRW in 2021, 76 billion KRW in 2022, and 66 billion KRW last year.

The return to profitability is expected to be led by the subsidiary Megabox. The Korean film market in 2024 is projected to have an audience of 143 million, which is 64% of the pre-pandemic level in 2019. The total audience in 2023 was 125.14 million. Researcher Kim said, "Contentree Joongang is a major player in investment and distribution," noting, "Since 2020, all three films that attracted over 10 million viewers were investment and distribution works of Contentree Joongang." The three films with over 10 million viewers are 'The Outlaws 2', 'The Outlaws 3', and 'Spring in Seoul'. This year, 'The Outlaws 4' will be released in April. Over the past two years, investment and distribution profits and losses for major works (with production costs over 7 billion KRW) were 13.7 billion KRW and 19.5 billion KRW respectively, ranking first among the top five distributors.

Another key subsidiary, the production company SLL, is also performing well in the content industry. Researcher Kim evaluated, "They sell content by pre-selling to global online streaming services (OTT) and then scheduling on JTBC," adding, "They pursue various strategies such as jointly securing OTT and intellectual property (IP)." He believes they are employing a strategy that leaves open the possibility of utilizing their own IP rather than allowing OTTs to have exclusive rights.

A representative example is 'Hyde', scheduled to air in March. It is a Coupang Original and is also scheduled on JTBC, with steadily rising viewership ratings. Researcher Kim said, "Since starting direct investment in 2017, the average viewership ratings of major works were 4.2% in 2017, 6.1% in 2022, and 9.1% in 2023," adding, "During this period, Contentree Joongang's works ranked 1st to 3rd in non-terrestrial viewership ratings."

Meanwhile, Wiip, the only subsidiary expected to post an annual loss, is anticipated to challenge the break-even point (BEP) on a quarterly basis by scheduling two verified successful works in the second half of this year.