[Click e-Stock] "Cheil Worldwide Maintains Stable Q2 Performance... Competitiveness Proven by Results"

On June 27, Samsung Securities analyzed that Cheil Worldwide is expected to maintain stable performance in the second quarter of this year.

Choi Minha, a researcher at Samsung Securities, stated in a report released that day, "Gross profit for the second quarter is expected to reach KRW 481.4 billion (up 6.2% year-on-year), and operating profit is forecast at KRW 92.2 billion (up 4.5% year-on-year), aligning with the lower end of market consensus." He added, "Although the scale of performance will increase compared to the previous quarter due to the seasonal peak period, the pace of industry recovery appears to have fallen short of initial expectations."

While a full-fledged recovery in the advertising industry is not yet evident, overseas sales growth, driven by the consolidation of the North American subsidiary, seems to have supported the results. He explained, "The North American subsidiary acquired at the end of last year has been consolidated since the first quarter of this year, and the continued M&A effect likely led to an increase in overseas gross profit, driving top-line growth. However, profitability improvement is expected to be limited due to investments in workforce to strengthen competitive capabilities."

The operating margin for the second quarter is expected to be 19.1% of gross profit, which is 0.3 percentage points lower than the previous year. The growth in domestic non-affiliate advertising volume appears to have slowed somewhat compared to the previous quarter. However, Cheil Worldwide has consistently expanded its coverage in high-demand sectors such as digital and BTL, and is actively working to secure new advertisers.

There are also expectations for the industry in the second half of the year. He said, "As market uncertainty eases, expectations for a recovery in domestic demand and an improvement in industry conditions in the second half are gradually increasing. Given that Cheil Worldwide has continued to increase advertising volume both domestically and internationally even in challenging environments, it is expected that profit improvement will accelerate once industry recovery becomes more visible."

From a profitability perspective, a conservative outlook is maintained as cost pressures persist. He explained, "Considering the ongoing cost burden, profitability improvement is likely to be limited, and the focus will be on maintaining the operating margin relative to gross profit at the previous year's level."

Reflecting this performance stability and growth strategy, Samsung Securities raised its target price for Cheil Worldwide by 6% to KRW 25,000. Choi emphasized, "Based on solid fundamentals, Cheil Worldwide will continue to expand its coverage in digital, retail, and platform sectors, and is expected to accelerate performance expansion as the business environment improves," highlighting the company's long-term growth potential.