[Click e-Stock] "CJ ENM Undergoing Normalization Process"

On April 25, Meritz Securities analyzed that CJ ENM is currently undergoing a normalization process.

Jung Jisoo, a researcher at Meritz Securities, stated in a report released on this day, "Consolidated sales in the first quarter are expected to reach 1.1582 trillion won (up 0.4% year-on-year), and operating profit is projected at 21.4 billion won (up 73.9% year-on-year), which is slightly below the market consensus for operating profit of 22.7 billion won."

By segment, the media platform division is expected to record sales of 331.2 billion won (up 5.4% year-on-year) and operating profit of 2.6 billion won, affected by sluggish TV advertising market conditions and subscriber losses at Tving following the end of its partnership with Naver. Jung explained, "Tving appears to have successfully turned to profitability, but the impact of declining subscribers still remains."

In the film·drama division, although three titles from Fifth Season were supplied and performed well, the absence of new investment-distributed titles is expected to result in sales of 342.3 billion won (down 6.6% year-on-year) and an operating loss of 19.6 billion won. He added, "While Fifth Season's titles were supplied, it will take some time for overall profitability to recover."

The music division saw achievements such as the release of Zerobaseone's albums in Korea and Japan, izna's digital single, and JO1's world tour concert, but some promotion costs for new groups are expected to be reflected. In external concerts, performances by Taeyeon, Lim Youngwoong, and Ateez contributed to results, with sales expected to reach 152.7 billion won (up 21.4% year-on-year) and operating profit at 11.1 billion won (up 132.7% year-on-year).

The commerce division is expected to see a slight decrease, with sales of 332 billion won (down 4.5% year-on-year) and operating profit of 25.8 billion won (down 1.5% year-on-year), due to the continued expansion of the mobile commerce business since last year.

The annual performance outlook is positive. Jung analyzed, "In 2025, consolidated sales are expected to reach 5.3013 trillion won (up 1.3% year-on-year), and operating profit is projected at 172.3 billion won (up 64.9% year-on-year), indicating a significant improvement in performance." In particular, the media platform division is expected to have 4.99 million paid Tving subscribers by the end of the year, resulting in operating profit of 25.9 billion won (up 2.2% year-on-year).

Additionally, the film·drama division is projected to achieve a turnaround to profitability with operating profit of 5.9 billion won, driven by expanded delivery of Fifth Season's titles. The music division is also expected to expand its IP holdings through the debut of new groups in Korea and China, in addition to existing artist activities.

Jung commented, "Livecity, which recognized a large impairment in the third quarter last year, is not expected to incur significant additional costs beyond loan repayments," interpreting this as "part of the overall process of normalizing performance."