[Click eStock] "CJ CGV Continues External Growth Through Olive Networks Consolidation Effect"

Q3 Revenue Expected at 544 Billion KRW, Up 33.5% YoY
Headquarters Alone Expected to See 6.5% Sales Decline Due to Underperformance of Anticipated Titles
With Consolidation Effects Fully Reflected Next Year, Annual Sales Likely to Reach 2.3 Trillion KRW

Meritz Securities analyzed on the 30th that CJ CGV is likely to achieve external growth due to the inclusion effect of CJ OliveNetworks. They maintained a 'Buy' investment rating and a target price of 9,000 KRW. The previous closing price of CJ CGV was 5,540 KRW.

According to Meritz Securities, CJ CGV's consolidated sales for the third quarter of 2024 are expected to reach 544 billion KRW, a 33.5% increase year-on-year. Operating profit is forecasted at 36.4 billion KRW (+19.4% YoY), which is below the market consensus of 49.5 billion KRW. Due to the consolidation of CJ OliveNetworks in June, this quarter is also expected to record sales of 175 billion KRW and operating profit of 15.1 billion KRW.

However, CJ CGV headquarters is expected to see a 6.5% decrease in sales compared to the previous year due to the poor performance of anticipated releases. Additionally, the box office in China is projected to decline by 27.5% year-on-year due to the economic downturn. On the other hand, major overseas markets excluding China, such as Turkey and Indonesia, are expected to maintain a box office recovery trend with sales increases of 28.9% and 13.2%, respectively.

The full-year consolidated performance for 2024 is expected to be sales of 1.9416 trillion KRW (+25.6% YoY) and operating profit of 110.6 billion KRW (+125.4% YoY). In the fourth quarter, which marks the peak season, anticipated releases such as "Venom: Let There Be Carnage," "Gladiator 2," and "Moana 2" are scheduled to open, which is expected to increase the number of moviegoers to 33.96 million (+8.7% YoY). Improvements in price indicators such as average ticket price (ATP) and per capita concession spending (SPP) are also expected.

Jisoo Jeong, a researcher at Meritz Securities, stated, "In China, where the recovery is sluggish, we plan to reduce fixed costs by closing additional underperforming sites. CJ OliveNetworks is expected to account for 21.4% of total sales and 33.1% of operating profit, respectively. In 2025, when the consolidation effect is fully reflected, CJ CGV's sales are projected to reach 2.3867 trillion KRW (+22.9% YoY) and operating profit to 162 billion KRW (+46.5% YoY)."