[Click eStock] "CJ ENM Faces Large Losses from Live City... Target Price Cut by 5%"

Q3 Revenue Increase Despite Net Income Decline
Impact of LiveCity Donation and Disposal Loss
"Bad Things Seem Over" Non-Core Asset Sales and Tving Growth Expected

Hana Securities adjusted the target price for CJ ENM down by 5% to 95,000 KRW on the 8th, following a large-scale loss due to recent cost recognition related to Live City. The investment rating of 'Buy' was maintained. CJ ENM's closing price on the previous trading day was 58,100 KRW.

Researchers Kihoon Lee and Hyunsoo Kim of Hana Securities stated, "This adjustment reflects most of the potential risks going forward, and there remains optimism for stock price recovery due to the divestment of non-core assets and growth potential in TVING and the music industry."

According to Hana Securities, CJ ENM's Q3 revenue was 1.12 trillion KRW, and operating profit was 15.8 billion KRW, representing a 114% increase year-on-year; however, net profit sharply declined to -531.4 billion KRW. This was due to cost recognition from the donation and construction-related asset and land disposal losses associated with the Live City project. Therefore, the Live City issue regarding profit and loss can be considered in its final stages.

The Media Platform division saw a reduction in operating losses due to stabilized TV advertising and an increase in TVING users (surpassing 7.8 million), with the box office success of the movie Veteran 2 contributing to revenue. Conversely, the Film and Drama division underperformed due to Studio Dragon's return to losses and losses from The Fifth Season, though some successful works helped mitigate losses.

CJ ENM's Q4 operating profit is expected to reach 87.5 billion KRW, a 49% increase year-on-year. TVING is rapidly growing and may reach breakeven within the year, while the Film/Drama division is anticipated to achieve a strong turnaround to profitability, supported by Studio Dragon's profit recovery and the release of the movie Harbin. Additionally, the Music division is expected to improve performance due to major artist tours and the upfront recognition of debut costs.

CJ ENM is pursuing the sale of non-core assets, including its stake in Netmarble, to improve its financial structure. This is expected to provide a foundation for positive stock price impact driven by the growth potential of TVING and the music business in the future.