[Click eStocks] "Cheil Worldwide Results to Miss Estimates by 19%... Target Price Lowered"

Samsung Securities has lowered its target price for Cheil Worldwide from 23,500 won to 21,000 won. This adjustment follows the expectation that the company's third quarter performance will fall short of estimates by a double-digit margin.

According to Samsung Securities on September 16th, Cheil Worldwide is estimated to post an operating profit of 81.8 billion won in the third quarter, down 14.7% year-on-year. This figure is 19% below the consensus estimate of 100.8 billion won. Min Ha Choi, a researcher at Samsung Securities, conveyed that "despite defending based on differentiated service competitiveness and growth areas, short-term profits are expected to disappoint initial expectations as the largest advertiser continues to strengthen marketing efficiency efforts." The reversal to cost strength is also expected to act somewhat unfavorably on performance.

It is also likely to be difficult for Cheil Worldwide to achieve its initial guidance of "5% gross profit growth and stable operating margin" for the year. Gross profit for this year is projected to grow only 0.3% year-on-year, while operating profit is expected to decline by 13%. Reflecting this, Samsung Securities has revised down its net profit forecasts for this year and next by 11% and 9%, respectively.

Researcher Choi stated, "We are lowering the target price to 21,000 won, down 10.6% from the previous target," and added, "We are also lowering our investment rating from 'Buy' to 'Hold,' judging that the upside for the stock price in the short term is limited." However, Cheil Worldwide’s high dividend yield, enabled by a consolidated dividend payout policy of around 60%, as well as the potential cancellation of currently held treasury shares (12%), were evaluated as factors supporting the downside of the stock price. On the previous day, Cheil Worldwide’s closing price was 18,860 won.

This content was produced with the assistance of AI translation services.