[Click eStock] "CJ ENM, Tving-driven Earnings Recovery... 234 Billion KRW Profit This Year"

Tving's Pro Baseball Broadcast Effect Expected to Significantly Reduce Deficit Scale
Another 'Deficit' Business, Fifth Season, Predicted to Turn Profitable
'Star Performer' Music Sector Anticipated to Generate Operating Profit of Around 70 Billion Won

Daishin Securities analyzed on the 15th that the normalization of CJ ENM's annual performance will begin with TVING. They maintained a 'Buy' investment rating and a target price of 110,000 KRW. CJ ENM's closing price on the previous trading day was 73,700 KRW.

Kim Hoe-jae, a researcher at Daishin Securities, stated, "A turnaround to profitability is expected in 2024, with significant improvements starting in the second half of 2024," adding, "Beginning with a recovery centered on TVING in the first quarter, followed by a full recovery of TV and F/S from the second quarter, the annual performance will normalize." CJ ENM posted an operating profit of 13.7 billion KRW in 2022 but recorded an operating loss of 1.5 billion KRW last year, turning to a deficit. It is forecasted to return to profitability this year.

First-quarter sales are estimated at 1.1 trillion KRW, with an operating profit of 7.3 billion KRW. By segment, media platform is -5.6 billion KRW, film/drama -12.2 billion KRW, music 15.7 billion KRW, and commerce 10.4 billion KRW. Researcher Kim said, "Operating profit is expected to grow to 49.8 billion KRW in the second quarter, 78.8 billion KRW in the third quarter, and 98 billion KRW in the fourth quarter," and "We forecast an operating profit of 234 billion KRW for 2024."

TVING, highlighted as the key to performance normalization, is projected to have 4.3 million paid subscribers and an operating loss of 17.2 billion KRW in the first quarter. Due to the effect of professional baseball broadcasts, the mobile app's net users increased by 490,000 in March alone. Although TVING posted a loss of 140 billion KRW last year, the scale is expected to shrink significantly to 21 billion KRW this year. Furthermore, if a merger with WAVVE is realized in the future, profits are expected to improve by more than 130 billion KRW. Researcher Kim noted, "TVING mainly targets tvN and general programming channels, while WAVVE focuses on terrestrial broadcasters, so there is little overlap in subscribers," adding, "A considerable level of cost reduction is expected."

Regarding Fifth Season, another 'pain point' for CJ ENM, it is forecasted to generate an operating profit of 35 billion KRW for the year. In the first quarter, it supplied two works and recorded a loss of 10 billion KRW. Despite last year's poor performance, the music division, which acted as a cash cow, is expected to record an operating profit of 71.6 billion KRW annually. In particular, if the results of exclusive contracts, CJ ENM's first attempt in the music business, are reflected, even greater profits are anticipated. On the 17th, the Japanese girl group ‘ME:I’ will debut, and in the third quarter, the girl group ‘I-Land2’ is scheduled to debut. The selection process for ‘I-Land2’ will be broadcast on Mnet starting the 18th, and through production by Teddy’s The Black Label, CJ ENM’s first seven-year fixed-term official girl group will be born.