Thanks to China's move to restrict imports of S. Korea's cultural materials
SEOUL, Jan. 20 (Yonhap) -- Shares of entertainment and media content company CJ E&M have been flying high, about the only gainer in the industry hit by China's move to restrict imports of South Korea's cultural material, market data showed Friday.
The company's stock, listed in the secondary market KOSDAQ, closed at 87,200 won (US$74) on Thursday, up 10.8 percent from the previous day. It is the highest since Feb. 4 last year and marks a 62.08 percent jump in just seven weeks since the most recent nadir on Dec. 5 last year. The market cap has recouped the 3 trillion-won range after 10 months.
The firm's latest hit drama "Guardian" and recently released mobile game "Lineage II: Revolution" are given big credits. The drama, aired on the company's cable channel tvN, has been dominating the TV popularity chart, while the role playing game from Netmarble chalked up 206 billion won in sales in the first month of its release, the biggest on record for a local gaming company. CJ E&M is the second-largest shareholder of Netmarble with 27 percent.
The company has been making a solo flight in the stock market. Other industry competitors have been boxed in after China reacted in fury against Seoul's decision in July last year to host the U.S. missile defense system THAAD. Retaliations included activities in China by popular Korean entertainers, controlling cultural content imports and reining in travel programs to South Korea.
Shares of SM Entertainment and YG Entertainment have yet to rise back up after hitting a 52-week low at the end of November. Their stock prices have halved from the highest reached in April and May last year. The price of Showbox stocks has been stuck in the 5,000 won range, down from its peak of the 8,000 won band in May last year.
Securities firms expect the company's performance to continue and have raised their outlook. Samsung Securities raised its outlook from 77,000 won to 87,000 won. HMC Investment Securities gave a higher 95,000 won, up from 77,000 won, while KTB Investment & Securities upped the outlook to 120,000 won from 100,000 won.
Lee Nam-jun, an analyst at KTB Investment & Securities, estimated the entertainment company's net profit this year at 201.6 billion won, up 121 percent from last year, mainly from the success of Netmarble.
"The appropriate market cap for Netmarble, given its performance expectations this year, is about 10 to 12 trillion won. Assuming that the company will issue 20 percent of new stocks, the value of CJ E&M's shares in the company will increase from 1.8 trillion won to 2.5 trillion won," he said. "CJ E&M on its own is on a growth track from its core business."