[Click e-Stock] "CJ ENM, Emergence of an OTT Giant Imminent"

Target Price Raised from 77,000 Won to 95,000 Won

On June 11, Hana Securities raised its target price for CJ ENM from 77,000 won to 95,000 won, stating that the company appears to be concluding a prolonged period of adjustment as expectations for the merger between Tving and Wavve become more tangible and hopes for the easing of the Chinese content ban grow. The investment opinion was maintained at 'Buy.'

Under the Lee Jaemyung administration's policy to foster the content industry, discussions about mergers within the OTT (over-the-top) platform market are gaining momentum. Previously, the Fair Trade Commission reviewed and approved the merger notification regarding the dual executive system between Tving and Wavve, on the condition that both companies maintain their current pricing plans until December 31, 2025. This approval comes two and a half years after the two companies signed a memorandum of understanding (MOU) for the merger at the end of 2023.

Lee Kihun, a researcher at Hana Securities, interpreted this as a preliminary step toward full integration, and predicted that, after the merger, a major OTT player with a combined 11.28 million domestic subscribers?second only to Netflix (14.51 million MAU)?would emerge. He analyzed that the launch of bundled subscription plans and other initiatives would lead to an increase in subscribers and a reduction in production costs, thereby creating significant synergy. The two companies are also aiming for 15 million subscribers, including overseas expansion, by 2027?about three times the number in 2024.

Currently, the main pledges related to cultural and artistic policy under the Lee Jaemyung administration include: ▲ strengthening national support for the entire process of K-content creation ▲ fostering K-culture platforms such as OTT ▲ achieving 50 trillion won in cultural exports through a dramatic increase in cultural funding. Researcher Lee stated, "The government has pledged active support aimed at globalizing the K-culture brand," and added, "With proactive policies to boost domestic demand expected, the advertising market, which had experienced a sharp decline, is also projected to recover rapidly after bottoming out in the first quarter."