April 20, 2024

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[THE INVESTOR] CJ CGV’s business in China will improve, said SK Securities on May 18, initiating its coverage with a “buy” recommendation and 100,000 won (US$92.50) target price. 

With its first-quarter earnings, it has shown that its Chinese operations can post high growth and profitability again. Although it is yet to secure a dominant position in the local cinema industry, it can surely enjoy the flourishing market, said analyst Son Yoon-gyeong.

Before the conflict over THAAD deployment, it was steadily expanding its market share in the country. Despite the limited campaigning afterward, its market share has not been seriously undermined, and the recent thawing of diplomatic relations that a favorable environment is forming for further expansion, said the analyst. 

Its cinema business at home has been weighed down by minimum wage hike in addition to burdensome leasing costs. However, as it has raised ticket prices with a number of movies scheduled, its earnings are likely to improve, added Son.

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