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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] On the 10th, Daishin Securities reaffirmed its "Buy" rating and target price of 30,000 KRW for Cheil Worldwide (030000), stating that despite the performance of major advertisers, the company continues to improve its earnings while maintaining a high dividend policy. The previous day's closing price was 17,700 KRW.
Daishin Securities projected Cheil Worldwide's gross profit (GP) for Q4 2024 at 450 billion KRW, a 5% year-on-year increase, and its operating profit (OP) at 83.1 billion KRW, a 9% rise compared to the previous year.
The report noted steady growth in transactions with major advertisers, which account for approximately 70% of the company's revenue. Analyst Kim stated, "Since 2009, there were three periods of declining sales from major advertisers, during which both their marketing expenses and service transactions with Cheil Worldwide decreased. However, Cheil's gross profit only declined during the early pandemic years of 2019–2020 by 5.2%, while it grew in all other periods."
Daishin Securities also highlighted Cheil's efforts to diversify its client base. "As Korea’s leading advertising agency, Cheil Worldwide has consistently acquired non-affiliated advertisers domestically. Overseas, M&A subsidiaries acquired between 2008 and 2015 have significantly contributed to non-affiliated advertiser acquisition since 2015, allowing gross profit to grow even during periods of reduced transactions with major advertisers."
The company’s robust dividend policy was another point of focus. Since 2000, Cheil has implemented shareholder-friendly policies, including an average payout ratio of 30% from 2000 to 2011, stock repurchases from 2012 to 2015, and a combination of dividends and buybacks in 2015. From 2016 onward, it shifted exclusively to dividends, maintaining a payout ratio of 60% since 2017.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
