[Click eStock] "CJ CGV, Rapid Theater Recovery Expected to Turn Profitable... Target Price Maintained"

Three 10-Million-Viewer Films in 5 Months (Including Expected) 'Rare Record'
From Deficit in Q1 2023 to Projected Profit This Year
"Performance Improvement to Accelerate from Q2"

Daishin Securities maintained a 'Buy' investment rating and a target price of 10,000 KRW for CJ CGV on the 3rd, stating that theaters are rapidly returning to normal. CJ CGV's closing price on the previous trading day was 5,730 KRW.

Kim Hoe-jae, a researcher at Daishin Securities, said, "Despite the off-season, the appearance of blockbuster movies with over 10 million viewers has increased the audience," adding, "However, due to various promotions such as CGV's SKT membership application, the average ticket price (ATP) decreased to 9,800 KRW."

CJ CGV's first-quarter sales are expected to be 400 billion KRW, with an operating profit of 4.3 billion KRW. The operating profit has turned from a loss in the same period of 2022 to a profit. Specifically, domestic and Chinese operations are estimated to have operating losses of 9.9 billion KRW and 2.4 billion KRW, respectively, which were offset by profits in other overseas regions such as Vietnam (7.5 billion KRW), Indonesia (2.3 billion KRW), and T?rkiye (1.3 billion KRW).

The domestic theater market is expected to see the achievement of 10 million viewers for 'Spring in Seoul' in December 2023, 'Pamyoh' in March this year, and 'The Outlaws 4' by May. This is anticipated to be a remarkable record of three blockbuster movies with over 10 million viewers appearing within five months. Researcher Kim said, "The subscription fees for competing domestic and international OTT services have increased by about 30-40%, and with the abundance of content shown by these three blockbuster movies, a rapid recovery of theaters is expected."

In particular, after the first half of the year, as most older movies are exhausted, mid-tier hits attracting around 5 million viewers, which play an important role in improving performance, are expected to appear in earnest. CJ CGV's operating profit is also expected to become more visible with 28.8 billion KRW in Q2, 57.3 billion KRW in Q3, and 33 billion KRW in Q4. Researcher Kim stated, "The performance of CJ OliveNetworks, which is currently undergoing an in-kind capital contribution valued at about 440 billion KRW, is estimated to be reflected in CGV's consolidated results from Q3," adding, "The annual profit scale is expected to reflect about 27 billion KRW starting in the second half of the year."