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[Alpha Biz= Reporter Kim Minyoung] Kiwoom Securities Lowers Target Price for Cheil Worldwide, Citing Lack of Long-term Profit Growth Potential
Kiwoom Securities analyzed on the 18th that Cheil Worldwide lacks growth potential for long-term profit generation. The investment opinion is maintained as 'Buy,' but the target price has been lowered from 25,000 won to 22,500 won.
Kiwoom Securities stated, "Cheil Worldwide is expected to meet its performance forecast for the second quarter through cost efficiency," and predicted, "The gross profit is expected to increase by 1.8% year-on-year to 4,325 billion won, and the operating profit will increase by 3.5% to 877 billion won."
Due to major advertisers aiming to optimize their marketing expenses, it will be challenging for Cheil Worldwide to enjoy the effects of the advertising peak season. However, considering factors like the Paris Olympics and interest rate cuts, the performance in the second half of the year is likely to improve compared to the first half.
Despite an increase in labor costs due to the expansion of the digital business, it is not expected to be a financial burden. The gross profit from the digital sector has been on the rise, increasing from 474.9 billion won in 2020 to 815.3 billion won in 2022, and is expected to reach 874.2 billion won in 2023.
However, the lack of growth potential was cited as a concern. Kiwoom Securities stated, "While the investment opinion is maintained as 'Buy' based on performance stability, the target price has been lowered due to the slowdown in growth."
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
