CJ CGV’s main businesses at home and abroad have been slow, said KB Investment and Securities on Feb. 13, lowering the target price to 50,000 won (US$44.60) from 60,000 won.
As per its earnings report released the previous day, operating profit in the fourth quarter dropped 39.9 percent on-year to 25.6 billion won and revenue 0.8 percent to 50.3 billion won.
Despite having raised ticket prices in the domestic market, the baseline effect due to Chuseok holidays and box office returns in the fourth quarter of 2017 dragged down its profits, said analyst Lee Dong-ryun. Operating profits from main overseas markets also declined.
Increases in fixed costs from expanding sites, an unfavorable holiday schedule and the weak Turkish lira has weighed down the bottom line across the company, explained the analyst.
This year, however, expansion in strategic areas including China, Vietnam and Indonesia will gradually show results, said Lee, maintaining a “buy” recommendation.
By Hwang You-mee (firstname.lastname@example.org)