KB Securities said on the 29th that Cheil Worldwide is expected to benefit from captive (intra-affiliate contracts) marketing budgets. Despite a slump in the advertising market in the third quarter, it is expected to recover after the fourth quarter. The target price was kept at 25,000 won, and the investment rating was maintained at "buy."
Cheil Worldwide's third-quarter operating profit is expected to be 92.8 billion won, a 2.9% decline from a year earlier. Gross profit is expected to grow only 5.2% due to the slowdown in ad placements. In overseas markets, with continued strong growth in the United States, it will likely grow 7.6%, but the headquarters is expected to see a 3.1% decline due to the domestic market slowdown.
However, after the fourth quarter, as the advertising market shows signs of recovery, Cheil Worldwide's results are also expected to recover somewhat. In particular, it is expected to benefit from increased advertising demand from Samsung Electronics' mobile division. The fourth quarter is the peak season for the advertising market, and a relative base effect is also expected to appear from last year due to political issues.
Choi Yong-hyun, an analyst at KB Securities, said, "There are concerns arising from the advent of AI and the company's slowing growth, but considering the presence of a stable captive base, growth is possible," and noted, "Next year, gross profit could grow by 5% to 7%."