On June 24, Samsung Securities reported that despite a slowdown in the advertising market and conservative budget execution by major advertisers, Cheil Worldwide continues to experience growth through an expansion of its agency services. The firm maintained its target stock price at 25,000 won and its investment recommendation at 'Buy.'
Choi Min-ha, a researcher at Samsung Securities, stated, "In the second quarter, consolidated gross profit is expected to reach 495.8 billion won, a 2.5% increase compared to the same period last year, while operating profit is projected at 92.4 billion won, reflecting a 0.3% rise, aligning with market consensus expectations." He noted that even as the largest advertisers adopt a conservative approach to global advertising budgets, Cheil Worldwide is maintaining its growth trajectory through an expansion of its agency services.
However, Choi explained that some one-time costs incurred during the restructuring of overseas subsidiaries and investments in future growth areas such as AI and data science will likely keep operating profit at last year's level.
In contrast, he anticipates that the improvement in net profit will be relatively larger, considering the adverse effects of foreign exchange losses that impacted non-operating income in the second quarter of last year.
Choi also highlighted Cheil Worldwide's long-term growth potential. He noted that the company is strengthening its integrated marketing solutions capabilities by combining creative, media, strategy, digital, and experiential marketing in response to changes in the advertising industry structure.
With the growing demand for brand experience (BX) centered marketing from advertisers, there is significant potential for expansion into non-media advertising areas such as retail and offline marketing. Cheil Worldwide is also working to transition from a traditional advertising agency to a 'full marketing agency.'
Choi remarked, "Based on enhanced local business capabilities, Cheil Worldwide is expected to continue its growth in key regions while demonstrating stable performance through its global network and business diversification. The integration of AI and digital technologies is anticipated to enhance marketing capabilities and operational efficiency, leading to improved long-term profitability."
He added, "With the expected retirement of 12% of its treasury shares under the revised Commercial Act, this is also a positive aspect for shareholder returns."
* This article has been translated by AI.
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