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(079160 KS)
Entertainment
CJ CGV entered the Vietnamese market in 2011 with the acquisition of the countrys
largest multiplex chain, Megastar. In early 2014, the company completed rebranding all
of its local theaters to CGV. The Vietnam business recorded a loss in 2H11 right after
the acquisition, but quickly swung to a profit in 1Q12 and has seen steady growth in
both admissions and revenue since then.
Company Update
April 20, 2015
Buy
(Maintain)
Target Price (12M, W)
80,000
72,500
10%
Expected Return
OP (15F, Wbn)
87
82
106.9
37.2
22.3
11.1
2,143.50
1,534
21
60.9
16.5
Beta (12M)
Why CGV is likely to dominate the Vietnamese market in the long term
We recently visited CJ CGVs theater sites in Vietnam and came away with a more
positive outlook on the countrys market potential as well as the companys prospects.
1) CJ CGV has established a presence in major commercial areas early on thanks to its
timely market entry and aggressive expansion. The company has secured 15- to 20-year
leases for many of its theaters and is planning to do the same for its upcoming sites.
2) The company also enjoys a dominant position in film content as the countrys
exclusive distributor for four of the six largest Hollywood studios. We think these
arrangements will remain in place until the Vietnamese film market begins to mature.
3) The company boasts a solid reputation in the country. CJ CGVs theaters in Vietnam
are differentiated by their consistent interior designs, convenient facilities, diverse
concession offerings, and specialized theaters. Many shopping mall developers are
showing a strong preference for CGV theaters because of the brands well-established
image.
0.19
52-Week Low
52-Week High
43,200
72,600
(%)
Absolute
1M
22.1
6M
50.4
12M
46.8
Relative
15.6
33.4
36.4
170
CJ CGV
KOSPI
150
130
110
90
70
4.14
8.14
12.14
4.15
In April, there have been a number of days during which CJ CGVs admissions in China
outpaced its admissions in Korea (due to weak seasonality in the domestic market). We
believe investors are starting to reflect the value of overseas operations. In our view, CJ
CGV offers a compelling long-term growth story, supported by a combination of steady
domestic growth and strong potential overseas. We maintain our Buy rating and target
price of W80,000.
FY (Dec.)
Revenue (Wbn)
[Internet/Game/Entertainment]
OP (Wbn)
OP margin (%)
Chang-kwean Kim
+822-768-4321
changkwean.kim@dwsec.com
Jeong-yeob Park
+822-768-4124
jay.park@dwsec.com
NP (Wbn)
EPS (W)
ROE (%)
P/E (x)
P/B (x)
12/12
665
12/13
773
12/14
865
12/15F
909
12/16F
945
12/17F
990
72
10.8
68
8.8
71
8.2
87
9.6
99
10.5
112
11.3
73
3,528
43
2,062
33
1,572
69
3,253
78
3,678
87
4,128
20.4
10.3
7.2
13.7
13.7
13.6
9.1
1.7
21.1
2.0
34.3
2.4
22.3
2.9
19.7
2.5
17.6
2.2
Note: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests
Source: Company data, KDB Daewoo Securities Research estimates
Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the
the U.S.
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
CJ CGV
(%)
14
50
12
10
40
8
30
6
20
10
2
0
0
07
08
09
10
11
12
13
14
15
80
(%)
60
55
50
60
45
40
40
20
35
30
2010
2011
2012
2013
2014
2015F
2016F
2017F
2018F
2019F
2
Avg. of Malaysia, Philippines, and Thailand
1
0
Vietnam
Malaysia
Philippines
Thailand
China
India
Japan
South Korea
Singapore
CJ CGV
Figure 4. Shares
hares of Vietnam
Vietnams cinema operators in terms of
number of sites
BHD
6%
NCC 2%
Galaxy
9%
10
8
Platinum
10%
CJ CGV
43%
6
4
2
Lotte
30%
0
CJ CGV
Lotte
Platinum
Galaxy
BHD
NCC
Revenue (L)
OP margin (R)
(%)
14.0
12.0
50
10.0
40
8.0
30
6.0
20
4.0
10
2.0
0.0
0
CJ CGV
Lotte
Platinum
Galaxy
BHD
NCC
2012
2013
2014
50
30
30
20
10
10
-10
Revenue (JV)
1Q06
1Q07
1Q08
1Q09
1Q10
1Q11
1Q12
1Q13
1Q14
Revenue
(consolidated)
CJ CGV
(Wbn)
Revenue
865
909
945
990
Current Assets
Cost of Sales
Gross Profit
424
441
457
452
470
475
493
497
SG&A Expenses
12/14
12/15F
12/16F
189
199
306
12/17F
415
62
97
69
99
170
103
273
108
369
365
375
385
Inventories
71
71
87
87
99
99
112
112
27
961
27
934
29
910
30
899
NonNon-Operating Profit
Net Financial Income
Net Gain from Inv in Associates
-19
-15
0
4
-12
0
6
-7
0
11
-3
0
Investments in Associates
382
402
418
438
412
23
370
16
333
11
302
9
Pretax Profit
52
91
105
123
Income Tax
Profit from Continuing Operations
18
33
22
69
27
78
35
87
33
33
69
69
78
78
87
87
1,150
1,133
1,217
1,313
Current Liabilities
AP & Other Payables
350
147
267
154
278
160
291
168
102
101
327
106
331
111
334
116
338
255
255
255
255
31
31
69
69
78
78
87
87
72
677
76
598
79
612
83
629
0
133
0
137
0
140
0
146
Controlling Interests
Capital Stock
473
11
534
11
605
11
685
11
76
132
127
132
Capital Surplus
89
89
89
89
15.4
8.2
15.1
9.6
14.8
10.5
14.7
11.3
Retained Earnings
Non--Controlling Interests
Non
378
0
439
0
510
0
589
0
3.8
7.6
8.3
8.8
Stockholders' Equity
473
534
605
685
12/14
34.3
7.4
12/15F
22.3
10.1
12/16F
19.7
10.1
12/17F
17.6
9.7
2.4
10.7
2.9
12.5
2.5
11.5
2.2
10.4
Total Assets
Forecasts/Valuations (Summarized)
12/14 12/15F 12/16F 12/17F
146
132
127
132
33
69
78
87
121
49
83
42
75
36
71
32
P/E (x)
P/CF (x)
P/B (x)
EV/EBITDA (x)
13
EPS (W)
1,572
3,253
3,678
4,128
59
10
33
13
35
8
36
11
CFPS (W)
BPS (W)
7,300
22,344
7,197
25,247
7,201
28,575
7,479
32,353
-13
-4
-3
-4
DPS (W)
350
350
350
350
-1
15
0
4
0
3
0
4
22.3
0.6
10.8
0.5
9.5
0.5
8.5
0.5
-9
-22
-27
-35
11.9
5.1
4.0
4.8
-152
-69
-3
0
-2
0
-3
0
10.8
4.4
3.0
22.5
2.2
13.8
4.3
13.1
-23.8
106.9
13.1
12.2
28
-111
-3
0
-2
0
-3
0
12.5
297.0
11.8
265.9
11.7
264.4
11.7
265.4
22
-103
-7
-7
6.5
6.2
6.1
6.1
33
0
-96
0
0
0
0
0
ROA (%)
ROE (%)
3.0
7.2
6.0
13.7
6.6
13.7
6.9
13.6
Dividends Paid
-7
-7
-7
-7
ROIC (%)
31.1
Others
-4
16
102
102
Beginning Balance
Ending Balance
46
62
62
69
69
170
170
273
11.6
18.6
24.4
143.3
112.0
101.2
91.8
54.0
74.4
110.1
142.5
60.5
4.1
34.5
5.6
13.6
7.5
-3.0
8.4
CJ CGV
APPENDIX 1
Important Disclosures & Disclaimers
2-Year Rating and Target Price History
Company (Code)
Date
Rating
CJ CGV(079160)
02/05/2015
Buy
Target Price
80,000
11/14/2014
Buy
59,000
08/07/2014
Buy
56,000
05/11/2014
Buy
57,000
08/11/2013
Buy
63,000
05/12/2013
Buy
70,000
02/26/2013
Buy
48,000
(W)
80,000
60,000
40,000
20,000
0
Apr 13
Stock Ratings
Industry Ratings
Buy
CJ CGV
100,000
Apr 14
Apr 15
Overweight
Neutral
Hold
Sell
Ratings and Target Price History (Share price (), Target price (), Not covered (), Buy (), Trading Buy (), Hold (), Sell ())
* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.
* Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material
development.
* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analysts estimate of
future earnings.
* The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic
conditions.
Disclosures
Daewoo Securities Co., Ltd.`s analyst attended the IR meeting held by CJ CGV within recent one month. Expenses related to the meeting were covered by CJ
CGV
Analyst Certification
The research analysts who prepared this report (the Analysts) are registered with the Korea Financial Investment Association and are subject to Korean
securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions
expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this
report. Daewoo Securities Co., Ltd. policy prohibits its Analysts and members of their households from owning securities of any company in the Analysts
area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified
herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been
promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific
recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted by
overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and
private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of
the Analyst or Daewoo Securities Co., Ltd. except as otherwise stated herein.
Disclaimers
This report is published by Daewoo Securities Co., Ltd. (Daewoo), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange.
Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been
independently verified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or
correctness of the information and opinions contained herein or of any translation into English from the Korean language. If this report is an English
translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this
report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This
report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any
securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of
the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any
laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof.
Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or
form or redistributed or published, in whole or in part, without the prior written consent of Daewoo. Daewoo, its affiliates and their directors, officers,
employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a
purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or
agents. Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment
banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to
in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to
future performance. Future returns are not guaranteed, and a loss of original capital may occur.
Distribution
United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within
KDB Daewoo Securities Research
CJ CGV
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order), and (ii) high net worth companies and other
persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as Relevant
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thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that
they will direct commission income to Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed
herein should contact and place orders with Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The
securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or
sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements.
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