Hanwha Investment & Securities on the 21st said Cheil Worldwide still has significant room to raise earnings next year thanks to a business portfolio focused on retail-centered, non-media marketing. It maintained a Buy rating and a target price of 26,000 won. Cheil Worldwide's previous day's closing price was 22,100 won.
Cheil Worldwide posted third-quarter results this year of 1.1889 trillion won in revenue and 95.9 billion won in operating profit. They rose 10.9% and 0.3%, respectively, from a year earlier. Net profit increased 6.8% to 64.9 billion won.
Kim So-hye, an analyst at Hanwha Investment & Securities, said, "Even in a difficult environment with high external uncertainty, the company's top-line and profit growth trend remained solid," and noted, "As the year-end dividends season approaches, interest in Cheil Worldwide is also expected to grow."
Hanwha Investment & Securities projected that conditions in the advertising industry in the fourth quarter will not improve meaningfully.
Kim said, "The advertising industry typically sees the fourth quarter as the biggest peak season," but added, "While no clear signal of earnings improvement has appeared, projects delayed by the recession are being partially resumed, mainly among key affiliates."
At the same time, despite concerns that artificial intelligence (AI) could reduce budgets for marketing businesses, she viewed Cheil Worldwide's results as likely to remain stable. Advertising media companies at home and abroad currently expect that with the adoption of AI, marketing budgets could be cut.
Kim explained, "Despite the adoption of AI, Cheil Worldwide has already prepared its business portfolio around retail-centered, non-media marketing," and said, "With the business climate of major clients improving for next year, it will continue to deliver stable results that far outpace market growth next year."