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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Seoul, May 9, 2025 – NH Investment & Securities announced today that it has revised its target price for CJ ENM from KRW 80,000 to KRW 73,000, reflecting an 8.8% downgrade due to a significant earnings miss in the first quarter. Despite the downward revision, the firm maintained its ‘Buy’ investment rating.
According to analyst Lee Hwa-jung, CJ ENM’s consolidated Q1 2025 revenue was approximately KRW 1.1 trillion, down 1% year-over-year, and operating profit stood at KRW 700 million, marking a 94% decline. “This earnings shock was primarily driven by weak advertising performance across its media channels, which was heavily impacted by unfavorable macro conditions,” Lee commented.
However, she pointed to several recovery catalysts for the second quarter, stating, “In media, we expect performance improvement from Tving driven by the start of the professional baseball season. In content, The Fifth Season is expected to increase the number of delivered episodes. The music division should benefit from expanded artist activity and more flagship programming.”
Lee also noted the potential upside from geopolitical developments: “Should diplomatic ties between Korea and China improve and the ‘Hallyu Ban’ be lifted, CJ ENM stands to benefit across both music and content businesses.”
Regarding Tving, she observed that while its Weekly Active Users (WAU) dropped 10% in early April due to account sharing restrictions, user activity has since rebounded, reaching 3.37 million by the end of April. “Rather than focusing on the short-term decline, we should recognize the long-term growth trend in subscriber numbers,” she emphasized.
CJ ENM is expected to see progressive improvement in earnings from Tving’s subscriber and advertising revenue growth, as well as from increased content output at The Fifth Season.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
