[Click eStock] "CJ ENM Seeks Mid- to Long-Term Growth Momentum in China"

On October 10, KB Securities analyzed that CJ ENM could find growth momentum in the Chinese market.

Choi Yonghyun, a researcher at KB Securities, stated, "The hit rate of content is not translating into financial results. However, the merger between Tving and Wavve, along with the expansion of the music business (including IP expansion and improved contract structures), still presents a high possibility of mid- to long-term profit improvement." He added, "The current stock price level is not burdensome (with the 2025 expected price-to-book ratio at 0.6 times), so if the visibility of the monetization strategy increases, the stock price is likely to rise."

The third-quarter results are expected to fall short of market expectations. CJ ENM's third-quarter operating profit is estimated at 28.3 billion won (an operating margin of 2.2%), which is projected to be about 32% below market forecasts. Despite being the peak season, Tving is expected to post an operating loss of 6.2 billion won due to slow subscriber growth, while the media platform division is projected to record an operating profit of 6.5 billion won, a 39% decrease from the same period last year due to sluggish TV advertising.

The film and drama division is expected to turn from a loss to a profit, recording 4.6 billion won thanks to the sale of 10 TV episodes by its subsidiary, Fifth Season. The music division is projected to grow by 245% year-on-year to 8.1 billion won, despite a lull in activities by major artists. The commerce division is expected to decrease by 15% year-on-year to 7.8 billion won due to an increased proportion of low-margin MLC.

Researcher Choi commented, "The growth in Tving’s subscriber numbers is slower than expected, and content investment is likely to continue increasing due to intensified OTT competition, making a turnaround to profitability difficult. Ultimately, only the merger will further advance Tving financially." He noted that although a unified subscription plan for Tving and Wavve has been launched, the services are still operated separately, and a fully integrated service is expected to begin in earnest in the first half of 2026.

Meanwhile, CJ ENM is targeting the Chinese market, focusing on its music division. Researcher Choi said, "The Chinese market remains closed, but CJ ENM is knocking on the door through its music business." CJ ENM has secured IP that includes Chinese members through <Boys Planet 2>, and plans to acquire additional IP with <Planet C: Home Race>, which will feature an all-Chinese lineup.

He added, "Given CJ ENM’s successful experience utilizing Chinese IP, its track record of entering the Japanese market, and the extended contract periods (estimated at around six years), there is reason to look forward to future opportunities in the Chinese market."