[Click eStock] "CJ ENM, Disappointing Q2 but Profit Strength Confirmed... Positive Outlook for Second Half"

TVING Growth Expected to Restore Profitability of Media Platform
Commerce Sector Drives Revenue Growth with Expansion of Travel and Beauty Products
"Annual Operating Profit of 164.7 Billion KRW, Turning to Black"

Meritz Securities analyzed on the 9th that CJ ENM's Q2 earnings fell short of expectations, but confirmed that its profit resilience is positive. They maintained a 'Buy' investment rating and a target price of 105,000 KRW. CJ ENM's closing price on the previous trading day was 78,600 KRW.

Researcher Jeong Jisoo of Meritz Securities stated, "CJ ENM's consolidated revenue was 1.1647 trillion KRW, an 11.0% increase year-on-year, but operating profit was 35.3 billion KRW, below the market expectation of 42.3 billion KRW," adding, "The outlook for 2024 is positive." Annual consolidated revenue is expected to increase by 15.9% year-on-year to 5.0642 trillion KRW, with operating profit turning positive at 164.7 billion KRW.

Looking specifically at the Q2 results, the Media Platform division showed notable improvement in Tving's traffic despite weak TV advertising. Dramas such as "Nunmul-ui Yeowang" (Queen of Tears) and "Seonjae Eopgo Twieo" (Run, Seonjae), along with Korean Baseball Organization (KBO) broadcasts, drove Tving's growth, resulting in revenue of 352.9 billion KRW and operating profit of 16.5 billion KRW. On the other hand, the Film & Drama division continued to suffer poor performance with an operating loss of 20.2 billion KRW due to delays in content delivery by Fifth Season. In the Music division, album sales by INI and JO1 increased revenue by 16.4% year-on-year, but operating profit fell 59.2% to 4.9 billion KRW due to decreased concert revenue and increased artist production costs. The Commerce division saw significant revenue growth driven by travel and beauty products, recording an operating profit of 27.5 billion KRW.

Researcher Jeong said, "In particular, the Media Platform division is expected to recover profitability due to increased Tving subscribers and the effect of raising advertising rates," adding, "In the Film & Drama division, the supply of eight premium dramas is becoming visible, increasing the possibility of profit improvement." In the Music division, they plan to focus on improving profitability through the debut of rookie groups and expansion of concerts.