April 27, 2024

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[THE INVESTOR] CJ E&M’s operating profit in the fourth quarter last year widely missed market consensus, said KB Investment and Securities on Feb. 8, lowering the target price to 108,000 won (US$99.29) from 115,000 won. 

Its revenue in the period rose 11.4 percent on-year to 490.4 billion won, but operating profit plunged 72.8 percent to 3.5 billion won, over 85 percent below market expectations, said analyst Lee Dong-ryun.

Its movie sector suffered a 7.6 billion won loss, while one-off costs, including a 2.5 billion won loss from valuation of its music inventory, also dented earnings, explained the analyst. 

This year, armed with competitiveness in content, it will strengthen its businesses across sectors, from production to advertising and distribution, and its affiliate Studio Dragon in particular will gain sharply from rising content sales overseas, noted Lee.

CJ E&M’s revenue this year will increase 11.6 percent on-year to 2 trillion won and operating profit 71.5 percent to 108.4 billion won. An excessive stock price fall following the announcement of slow earnings may be an opportunity to purchase, said the analyst, maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)