[Click eStock] "Contentree Joongang, Target Price Lowered to 14,000 Won"

DB Financial Investment lowered the target price of Contentsree Joongang to 14,000 KRW on the 30th while maintaining a buy rating.

In the second quarter, consolidated sales amounted to 226.8 billion KRW, with an operating loss of 6.5 billion KRW. SLL's standalone operating profit was a favorable 6.5 billion KRW. Despite a decrease in the number of episodes aired for Captiz, all dramas such as "No Secrets," "Not a Hero," and "The Woman Who Plays" were sold with simultaneous OTT broadcasting rights, improving the margin rate. On a consolidated basis, an operating loss of 5.3 billion KRW was recorded due to the lack of content from Wiip.

In the third quarter, SLL's consolidated operating profit is expected to be 4.2 billion KRW, reflecting the sale of simultaneous OTT broadcasting rights for "She Who Is Different by Day and Night" and "Family X Melo," as well as production revenue from "In the Forest with No One" and "The Outlaws 4." Wiip, which underperformed in 2024, is expected to supply a total of three works annually, including the airing of "The Summer 2" in the first half of 2025. A reduction in losses of approximately 15 billion KRW compared to the previous year is anticipated.

Film profits in the second quarter recorded 100 million KRW. Performance was sluggish due to a 3.7% decline in the domestic box office, a 4.2% decrease in ATB, and increased advertising sales costs. In the third quarter, despite strong performances from investment returns on "The Outlaws 4," Cross Net revenue, and "Escape," losses are expected due to the poor performance of "Revolver." Investment films for the fourth quarter include "Bogota (Song Joong-ki)," "Cheongseol (low budget)," and "Love in a Big City (Kim Go-eun)." Shin Eun-jung, a researcher at DB Financial Investment, stated, "Structural improvement in film performance ultimately depends on growth in screening and advertising sales through audience recovery," adding, "From September, the release of anticipated films such as 'Veteran 2,' 'Joker,' 'Venom,' and 'Moana 2' is scheduled."

Following the downward revision of earnings forecasts for 2024 and 2025, the target price was lowered from 17,000 KRW to 14,000 KRW. From 2025, the annual inclusion of three works from Wiip, which had sustained losses, is expected, and amortization of broadcasting PPA will also decrease. Researcher Shin advised, "From a long-term perspective, performance improvement appears certain," and recommended, "In the short term, approach by individual film works, and in the long term, monitor the trend of quarterly loss reduction."