Growing into a real media group

Transcription

January 18, 2013
Company Report
CJ E&M (130960 KQ)
Media
Growing into a real media group
Daewoo Securities Co., Ltd.
What’s new: All business units expected to improve
Jee-hyun Moon
+822-768-3615
jeehyun.moon@dwsec.com
CJ E&M engages in a variety of media and content businesses, and we believe the
company will grow only after all of its business units improve. We anticipate such
growth to begin this year, as we project fundamentals to improve across the board.
Additionally, a large amount of new content is scheduled to be released this year
after a substantial amount of preparation. Of note, the companyÊs earnings have
become less volatile due to stable growth in advertising revenues at the broadcasting
division (though some business units are showing significant earnings fluctuations).
1) We expect the game divisionÊs revenues and profits to recover after two years
of sluggishness on the back of the launches of in-house developed games. 2) The
movie division has picked up since 2H12, and we anticipate the divisionÊs business
will grow in 2013 due to its solid movie lineup, as well as scheduled worldwide
openings of movies in which the company has invested. 3) As for the broadcasting
division, we expect earnings growth to outweigh concerns over investment (cost)
increases, given that the company has set its broadcasting schedules, which
primarily consist of programs developed in-house.
Catalysts: Rebounds in earnings and momentum
We expect CJ E&MÊs earnings to improve through 2013. Most importantly, we
anticipate improvements in revenues and margins at all business units will drive
this growth, as opposed to the success of certain programs or movies. We project
the companyÊs 2013 revenues to grow 19%. We project 2013 revenues at the
broadcasting, game, and movie divisions to expand 17%, 27%, and 22%,
respectively. We forecast the companyÊs 2013 operating profit to surge 151%, as:
1) we expect the games division to swing to positive, and 2) we forecast OP
margins at the broadcasting and movie divisions to rise.
Furthermore, we expect momentum to come from the companyÊs launches of new
movies and games starting in early 2013. We forecast the companyÊs moviedistribution market share to recover to 30% this year. We expect revenues related
to distribution and copyrights will grow due to the fact that the company is
increasingly investing in the production of movies. As for the game division, we
forecast the number of new smartphone games to double YoY this year. And the
company plans to roll out online games for the first time after a significant hiatus.
Valuation: Raise TP to W38,000 (due to upward revision to 2013F EPS)
We maintain our Buy call on CJ E&M and raise our target price from W36,000 to
W38,000. While we keep our target P/E (23.5x) unchanged, we revised up our 2013
EPS estimate by 6.8%. Furthermore, we revised up our 2013 revenue estimate by
6.5% and upped our 2013 OP margin estimate for the movie division by 1%p to
reflect increased movie investments. But we adjusted down our 2013 OP margin
estimate for the game division due to concerns over the companyÊs growing
marketing expenses (related to new games), as well as potential government
restrictions. We note that the potential success of new movies and games has yet
to be reflected in our valuation. We believe we have taken a conservative approach
to earnings forecasts.
Buy (Maintain)
Target Price (12M, W)
Share Price (01/17/13, W)
Expected Return (%)
EPS Growth (13F, %)
Market EPS Growth (13F, %)
P/E (13F, x)
Market P/E (13F, x)
KOSDAQ
Market Cap (Wbn)
Shares Outstanding (mn)
Avg Trading Volume (60D, '000)
Avg Trading Value (60D, Wbn)
Dividend Yield (13F, %)
Free Float (%)
52-Week Low (W)
52-Week High (W)
Beta (12M, Daily Rate of Return)
Price Return Volatility (12M Daily, %, SD)
Foreign Ownership (%)
Major Shareholder(s)
CJ et al. (43.76%)
Price Performance
(%)
1M
Absolute
20.0
Relative
20.4
§ Earnings & Valuation Metrics
FY
Revenues
(Wbn)
12/10
98
12/11
1,143
12/12F
1,387
12/13F
1,650
12/14F
1,835
OP OP Margin
(Wbn)
(%)
19
19.5
70
6.1
37
2.6
99
6.0
141
7.7
NP
(Wbn)
6
57
55
61
90
6M
29.2
20.8
38,000
32,100
18.4
11.7
19.1
20.0
9.0
506.35
1,218
38
339
10
0.0
55.2
22,000
33,800
0.69
2.3
6.8
12M
1.3
-3.1
Share price
EPS EBITDA FCF ROE
(Won) (Wbn) (Wbn) (%)
1,208
51
-35
1.9
1,745
361 -127
7.7
1,436
537 136
4.6
1,603
505
98
4.8
2,362
495
92
6.7
P/E
(x)
28.6
17.4
18.5
20.0
13.6
P/B EV/EBITDA
(x)
(x)
-2.1
10.1
2.8
3.7
1.5
1.9
1.5
2.3
1.3
2.1
110
KOSDAQ
100
90
80
70
60
50
1/12
5/12
9/12
1/13
Notes: 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 U.S.
I. Investment summary ...................................................................................................................3
1. Earnings and growth momentum to pick up this year...............................................................3
2. Growth story has only just begun..............................................................................................4
II. Valuation ......................................................................................................................................6
1. Raise TP to W38,000; Maintain Buy .........................................................................................6
2. High growth potential as a fledgling Asian media group...........................................................7
III. Company overview and industry analysis ..............................................................................8
1. Broadcasting: Waiting for economic recovery ..........................................................................8
2. Film: The K-film era is coming.................................................................................................10
3. Game: Showing sings of bottoming out ..................................................................................14
4. Music, performance, online businesses are expanding..........................................................21
5. CJ E&M in the CJ Group.........................................................................................................23
6. Risks ........................................................................................................................................25
IV. Earnings outlook......................................................................................................................26
1. Raise 2013F EPS by 6.8%......................................................................................................26
2. Across-the-board revenue and profit growth ..........................................................................26
2
January 18, 2013
CJ E&M
I. Investment summary
1. Earnings and growth momentum to pick up this year
CJ E&M engages in a variety of media and content businesses. Thus, we believe the
company will grow only after all of its business units improve. We anticipate such growth to
begin this year, as fundamentals are likely to improve across the board.
A large amount of new content is scheduled to be released this year after a substantial
amount of preparation. 1) We expect the game divisionÊs revenues and profits to recover
after two years of sluggishness on the back of in-house game launches. 2) The movie
division has picked up since 2H12, and we anticipate the divisionÊs business will grow in
2013 due to its solid movie lineup, as well scheduled worldwide openings of movies in
which the company has invested. 3) As for the broadcasting division, we expect earnings
growth to outweigh concerns over investment (cost) increases, given that the company has
set its broadcasting schedules, which primarily consist of programs developed in-house.
2013 outlook:
1) Earnings
improvement
2) New content
We expect CJ E&MÊs earnings to improve through 2013. Most importantly, we anticipate
improvements in revenues and margins at all business units will drive this growth, as
opposed to the success of certain programs or movies. We project the companyÊs 2013
revenues to grow 19%. We project 2013 revenues at the broadcasting, game, and movie
divisions to expand 17%, 27%, and 22%, respectively. We forecast the companyÊs 2013
operating profit to surge 151%, as: 1) we expect the game division to swing to positive, and
2) we forecast OP margins at the broadcasting and movie divisions to rise.
Furthermore, we expect momentum to come from the companyÊs launches of new movies
and games starting in early 2013. We forecast the companyÊs movie-distribution market
share to recover to 30% this year. We expect revenues related to distribution and copyrights
will grow due to the companyÊs increased investment in film production. As for the game
division, we forecast the number of new smartphone games to double YoY this year. And
the company plans to roll out online games for the first time after a significant hiatus.
We maintain our Buy call on CJ E&M and raise our target price from W36,000 to W38,000.
While we keep our target P/E (23.5x) unchanged, we revised up our 2013 EPS estimate by
6.8%. Furthermore, we revised up our 2013 revenue estimate by 6.5% and upped our 2013
OP margin estimate for the movie division by 1%p to reflect increased movie investments.
But we adjusted down our 2013 OP margin estimate for the game division due to concerns
over the companyÊs growing marketing expenses (related to new games), as well as
potential government restrictions. We note that the potential success of new movies and
games has yet to be reflected in our valuation. We believe we have taken a conservative
approach to earnings forecasts.
Raise TP to W38,000
Figure 1. CJ E&M: Stock price is ready to rise on earnings and momentum improvement
CJ E&M stock price
(W)
60,000
Sudden Attack 1:
Failure to ink publishing contract renewal;
Game sales decline;
Concerns over massive
Business risks increased
investment in broadcast content
50,000
Dec line in earnings ;
Wors ening inv es t or s ent iment
40,000
Sudden Attack 2: Cancellation
of contract with GameHi
Sudden Attack 1:
contract renewal
dispute
30,000
Sudden Attack 1:
Agreement for joint
publication with Nexon
Since 3Q, film/broadcasting
operations haverecorded
operating profits;Many
box office hits in 2H
All businesses excl.
broadcasting incurred
operating losses;
Delay to release of
G.I. Joe 2
Sold four SOs
to CJ HelloVision;
Reflected proceeds in 2Q
E arnings improv ed;
S uc c es s in mov ies
and games
20,000
2/11
4/11
6/11
8/11
10/11
12/11
2/12
4/12
6/12
8/12
10/12
12/12
Source: Thomson Reuters, KDB Daewoo Securities Research
KDB Daewoo Securities Research
3
January 18, 2013
CJ E&M
2. Growth story has only just begun
1) CJ E&M takes its first step as a fledgling media group
Media firms typically grow their businesses either through diversification or concentration.
Diversification requires deregulation, which allows capital to flow into the market and media
companies to engage in the management of other media firms. Under this model, various
types of media (newspaper, movies, broadcasting, and internet) are operated under the
umbrella of a media group. Meanwhile, companies adopting the concentration model tend to
specialize in specific media segments.
CJ E&M, a media group
capable of making largescale capital
investments
Historically, Korean media firms have had to adopt the concentration model due to tight
regulations. However, gradual deregulation and the entry of large conglomerates into the
media industry have encouraged M&A deals and the formation of media groups. CJ E&M is
the result of M&As.
The Korean government is anticipated to continue to support the media industryÊs growth.
Strict government control and a small market size have toughened Korean media firms,
encouraging them to strengthen their viability and competitiveness. Content production and
marketing know-how have also accumulated. Deregulation, combined with a broader market
base, should unlock the potential of media firms. In particular, content revenues from
overseas markets will become a new growth driver.
Figure 2. Growth strategy of media corporations
Diversified model
Concentrated model
Korean media companies
Small- to mid-size
independent
companies
Competition with rivals
Establishment
Market entrance
Entrance
Consolidation of segments
Formation of big media group
Overseas expansion
Market share expansion
in existing markets
Slowdown in
growth and
profitability
Spin-off of businesses
Securing new
growth drivers
Regulation easing
Active M&As
Production and distribution
competitiveness improvement
Concentration on
existing media businesses
Growth of scale
Growth
Maturity
Regrowth
Source: Alan B. Albarran, KDB Daewoo Securities Research
Figure 3. Curve of growth in media
Consolidation of media
companies to form groups
Growth and
profitability
gap widened
between business segments
Spin-off of
media businesses
Small- to mid-size
independent
companies
Regulation easing
active M&As
Establishment
Entrance
Growth
Maturity
Regrowth
Source: KDB Daewoo Securities Research
4
January 18, 2013
CJ E&M
2) Earnings volatility is decreasing
Media groups were
initially movie makers
Most US media groups started by producing blockbuster films, and then expanded into
media network businesses such as cable TV channels. Unlike the highly volatile film
business, media networks could provide stable revenues (ad revenues). As earnings volatility
decreased, their shares were re-rated, and the companies grew further. CJ E&M is following
a similar path, with its content business (started in 2012) allowing the companyÊs ad
revenues to grow steadily.
Time Warner engages in various media businesses, including cable TV channels (CNN and
HBO), filmmaking (Warner Bros.), and magazines (Time and Fortune). As of 2011, the
company generated 46% of its revenues from broadcasting, and 44% from movies.
Broadcasting revenues are rising steadily, driven by content exports (CNNÊs news and
HBOÊs programs). Meanwhile, magazine revenues are steadily declining, accounting for 13%
of total revenues in 2011, down from 19% in 2009.
Viacom produces and broadcasts cable TV programs (MTV) and films and runs a digital TV
business. Cable TV programs and movies respectively generate roughly 60% and 40% of
the companyÊs revenues (the film divisionÊs revenue contribution fluctuates depending on
economic conditions and the popularity of movies).
Growing ad revenues
help decrease earnings
volatility
Time Warner and Viacom have a business structure similar to that of CJ E&M (revenues
generated mostly from cable TV programs and films). The two companies were initially
movie makers, but later expanded to cable TV channels, which now make larger
contributions to profits than movies. They produce various content at relatively low costs,
generate stable revenues through ads and paid TV programs, and make large investments in
films. Under this business structure, earnings volatility decreases, and film content can
generate secondary revenues through cable TV channels.
CJ E&MÊs earnings appear to be improving across all business units. The film division
started to recover in 2H12, and game revenues are anticipated to expand in 2013 on
launches of new games. Broadcasting revenues should pick up sharply when the economy
recovers, as the company has made significant investments in content (establishment of a
system to broadcast in-house dramas).
Figure 4. CJ E&M: Quarterly operating profit and broadcasting revenue trend
(Wbn)
Total operating profit (L)
40
Broadcasting revenues (R)
As broadcasting advertising revenues have
grown, earnings volatility has decreased
(Wbn)
225
30
200
20
175
10
150
0
125
-10
100
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12F
Source: CJ E&M, KDB Daewoo Securities Research
5
January 18, 2013
CJ E&M
II. Valuation
1. Raise TP to W38,000; Maintain Buy
We maintain our Buy call on CJ E&M and raise our target price from W36,000 to W38,000.
We revised up our 2013 EPS estimate by 6.8%. Revenues at the broadcasting, game, and
movie divisions are projected to expand 17%, 27%, and 22%, respectively (19% overall).
Revise up 2013 EPS
projection
We forecast the companyÊs 2013 operating profit to surge 151% as the game division
swings to positive, and OP margins at the broadcasting and movie divisions rise. We upped
our 2013 OP margin estimate for the movie division by 1%p to reflect increased movie
investments, but adjusted down our 2013 OP margin estimate for the game division due to
concerns over the companyÊs growing marketing expenses (related to new games), as well
as potential government restrictions.
Meanwhile, we maintain our target P/E of 23.5x, calculated by applying a 15% discount to
private terrestrial broadcaster SBSÊs average P/E in 2005, when the companyÊs revenues
started to accelerate on strengthening content competitiveness. The 15% discount reflects
the discrepancy between the current and 2005 stock market P/Es, and the fact that CJ E&M
holds a few volatile businesses in addition to its broadcasting business.
At CJ E&M, broadcasting makes up the lionÊs share of total revenues. As such, we did not
reflect the potential success of new movies and games in our valuation, and conservatively
forecast earnings. Going forward, however, the movie and game businesses may affect the
companyÊs share price as they grow in size and make bigger revenue contributions.
Figure 5. EPS breakdown and trend
(W)
2,000
1,600
Non-operating
EPS
Operating EPS
Figure 6. Sales breakdown by division
(%)
OP decreased due to expanding content
investments and personnel costs, but nonOP increased thanks to
disposal of assets
160
120
Other
Film
Game
Other divisions posted losses
due to online business investments and
game development costs
Broadcasting
80
1,200
40
800
0
400
-40
0
-80
10
11
12F
13F
10
11
12F
13F
6
January 18, 2013
CJ E&M
2. High growth potential as a fledgling Asian media group
CJ E&M is trading at a 2013F P/E of 19.4x and a P/B of 1.5x (ROE of 4.8%). We expect the
companyÊs EPS to expand 11.7% this year. Excluding gains/losses from discontinued
businesses, operating profit should surge 171.5%.
Compared to foreign cable TV program providers and media groups engaged in businesses
similar to those of CJ E&M, the companyÊs valuation multiples seem relatively high. We
believe this is attributable to: the high growth potential of the Asian market and the
strengthening content competitiveness of the company.
Figure 7. P/B-ROE comparison (2013F)
Figure 8. P/E-EPS growth comparison (2013F)
(P/B, x)
5
(P/E, x)
22
Discovery Comm.
CJ E&M (excl.
asset disposal
gains in 2012)
Discovery Comm.
YTN
4
19
CJ E & M
3
News Corp. (Fox)
2
16
Disney (ESPN)
News Corp. (Fox)
CJ E & M
1
Time Warner
(CNN, HBO)
YTN
Time Warner
(CNN, HBO)
13
Disney (ESPN)
(EPS growth, %)
(ROE, %)
0
10
0
5
10
15
20
25
0
Source: Bloomberg, KDB Daewoo Securities Research
50
100
150
Source: Bloomberg, KDB Daewoo Securities Research
Table 1. Global major program providersÊ profitability and valuations
Company name
CJ E&M
YTN
Disney (ESPN)
News Corp. (Fox)
Time Warner (CNN, HBO)
Discovery Comm.
Average
Market
cap
1,180
168
94,716
67,789
49,637
25,527
OP margin
11
12F
13F
6.1
14.8
19.0
16.0
20.6
40.1
10.4
2.6
10.4
23.1
17.3
20.8
42.6
6.5
200
6.0
12.4
24.2
18.5
21.7
43.5
9.2
11
P/E
12F
13F
17.4
15.9
16.5
17.5
16.4
24.3
16.7
18.5
28.0
14.8
15.8
15.5
25.4
23.3
19.4
18.9
13.0
13.6
13.6
20.1
19.2
11
P/B
12F
13F
2.8
1.0
2.3
2.4
1.6
3.2
1.9
1.5
0.9
2.1
2.4
1.5
4.2
1.2
1.5
0.9
2.0
2.2
1.4
4.3
1.2
EV/EBITDA
11 12F
13F
3.7
7.3
9.6
9.5
8.8
11.0
5.5
1.9
15.1
8.4
9.5
9.2
13.3
8.5
2.2
12.0
7.7
8.7
8.6
11.7
7.1
(Wbn,%,x)
ROE
11
12F
13F
7.7
6.3
14.7
10.0
8.6
16.7
7.0
4.6
3.4
15.3
16.0
10.3
16.9
4.0
4.8
4.9
16.1
16.9
11.8
21.7
4.8
Note: CJ E&M data is KDB Daewoo SecuritiesÊ estimates, others are Bloomberg consensus / Source: Bloomberg, KDB Daewoo Securities Research
Table 2. Global major media groupsÊ profitability and valuations
Company name
CJ E&M
SBS Media Holdings
Disney
Comcast
News Corp.
Time Warner
Viacom
Clear Channel
RTL Group (EU)
M6 (Metropole)
Average
Market
cap
1,180
1,049
94,716
107,147
67,789
49,637
31,543
298
16,605
2,107
OP margin
11
12F
13F
6.1
29.4
21.0
19.2
16.0
20.6
28.1
17.2
18.9
17.0
19.3
11
P/E
12F
13F
11
P/B
12F
2.6
23.1
19.6
17.3
20.8
28.2
6.0
24.2
21.0
18.5
21.7
29.1
17.4
42.4
16.5
20.5
17.5
16.4
13.8
18.5
17.4
14.8
18.8
15.8
15.5
12.7
19.4
12.8
13.0
17.1
13.6
13.6
11.1
2.8
2.0
2.3
2.1
2.4
1.6
4.1
1.5
1.5
2.1
2.0
2.4
1.5
4.1
18.3
14.9
18.1
18.4
14.2
19.1
15.7
9.9
18.9
16.4
11.7
15.7
15.5
12.1
14.2
2.9
2.3
2.5
2.6
2.2
2.2
13F
EV/EBITDA
11 12F
13F
1.5
3.7
1.4 137.5
2.0
9.6
2.0
7.2
2.2
9.5
1.4
8.8
3.9
8.4
10.9
2.8
9.4
2.1
3.3
2.1 20.8
1.9
16.6
8.4
7.4
9.5
9.2
8.8
11.0
9.6
4.5
8.7
2.2
12.8
7.7
7.1
8.7
8.6
8.3
10.9
9.4
4.7
8.0
(Wbn,%,x)
ROE
11
12F
13F
7.7
4.7
14.7
12.5
10.0
8.6
4.6
9.0
15.3
12.1
16.0
10.3
31.3
4.8
11.4
16.1
11.8
16.9
11.8
34.5
15.0
23.7
12.1
14.9
19.5
14.8
16.1
18.4
15.7
Notes: CJ E&M data are KDB Daewoo Securities estimates; other figures are Bloomberg consensus / Source: Bloomberg, KDB Daewoo Securities Research
7
January 18, 2013
CJ E&M
III. Company overview and industry analysis
1. Broadcasting: Waiting for economic recovery
We expect earnings growth at the broadcasting division to outweigh concerns over
investment (cost) increases, given the company has set its broadcasting schedules, which
primarily consist of programs developed in-house. Once the economy turns upward,
advertising revenues should increase rapidly, in our view.
CJ E&M is a leading cable program provider (PP) in Korea, operating 18 channels. Last year,
the company saw a surge in investment costs due to an increase in the production of new
in-house programs. Except for an absence of news programs, the companyÊs broadcasting
schedule now looks similar to those of terrestrial broadcasters.
Broadcasting schedules
set; Earnings to improve
sharply once the
economy turns upward
Last year, the company made significant progress in drama production, signified by the huge
success of the in-house developed drama Reply 1997. The company began to air MondayTuesday dramas, similar to terrestrial broadcastersÊ miniseries. While tvN (operated by CJ
E&M) broadcasts soap operas in the morning, channels like OCN (also operated by CJ E&M)
air crime and investigation dramas on weekends. Of note is that producers who have
established their careers at terrestrial broadcasters have made popular dramas at CJ E&M.
The companyÊs channels also broadcast various survival and reality programs (e.g., auditions,
fashion, cooking, film, kids) based on the season model (many Korean shows are not broken
up into seasons). Reality programs are best-positioned to generate revenues from product
placements (PPL). Their seasonal format should help programs build loyal customer bases
and improve viewersÊ awareness of the programs, leading to higher viewer ratings. An
increase in advertisersÊ awareness of and preferences for programs directly leads to higher
advertising rates. The company usually broadcasts popular reality shows on Friday nights.
Meanwhile, the companyÊs weekend program lineup is similar to those of terrestrial
broadcasters (e.g, comedy shows, a reality show, matchmaking show). At terrestrial
broadcasters, advertising rates for entertainment programs aired in the late afternoon on
weekends are the highest. As CJ E&M has scheduled entertainment programs on
weekends as well, the company is expected to see a further increase in advertising
revenues. Meanwhile, on weekday evenings, CJ E&M channels air lecture, debate, and talk
show programs.
Figure 9. Broadcasting schedule for CJ E&MÊs major channels
Time
Mon
Tue
Wed
Thurs
Fri
Sat
Sun
Glass Mask: 9:40AM
8am-10am
Drama
Variety
E News: 11:30AM
10am-12pm
Misc.
News
Wide Entertainment News: 5pm
4pm-6pm
Paik Ji-yeon's People Inside: 7pm
6pm-8pm
8pm-10pm
Three Idiots: 7:40pm
Coolgadang: 7pm
My Flower Boy Neighbor: 11pm
Star Lecture: 9pm
Sassy Young-ae: 11pm
10pmBeatles Code: 11pm
Taxi: 12am
Alien Virus: 12am
Paik Ji-yeon's Debate: 12am
Gang Yong-suk's 19: 7pm
Comedy Big League: 9pm
The Romantic & Idol: 8:50pm
Voice Kids: 9-10pm
Kim Mi-kyung's Show: 10pm
Kim Won-hee's Chatter: 11pm
Note: Schedule for January, Source: CJ E&M, KDB Daewoo Securities Research
8
January 18, 2013
CJ E&M
We believe CJ E&MÊs TV advertising revenues will drive up structural growth in the cable
advertising market. In particular, advertising revenues between seasons, which have
traditionally been low, are improving.
An increase in in-house
programs leads to higher
advertising and content
revenues
On another positive note, an increase in the in-house production of dramas is boosting highmargin content revenues. At SBS, growth in broadcasting advertising revenues at the early
stages of its business boosted the competitiveness of its content, which led to the
expansion of exports and domestic revenues, eventually driving up OP margin. Overseas
terrestrial broadcasters (e.g., CBS) also saw increases in retransmission fees and content
revenues reduce the volatility of operating profits.
Table 3. CJ E&MÊs subsidiaries and channels
No. of
channels
Company
Channels
CJ E&M
CJNGC Korea
Badook Television
m.net, tvN, XTM, Channel CGV, O'live, tvN go, Tooniverse
NGC
Badook TV
Catch On Plus, SuP/E Action, OCN, Catch On, On Style, OCN series, Catch On
Demand
Ongamenet
China TV
KM
Orion Cinema Network
Ongame Network
International Media Genius
KMTV
Total
6
7
1
1
1
1
1
18
Note: DMB channels are excluded, Source: CJ E&M
Figure 10. Broadcasting divisionÊs quarterly revenues
(Wbn)
(%)
Advertising (L)
250
20
License fees (L)
Other (including content revenues, L)
% of other reveues in total (R)
200
18
150
16
100
14
50
12
0
10
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
Figure 11. Highly-rated programs at CJ E&M
Figure 12. Broadcast advertising market in Korea
(no.)
40
(Wbn)
2,500
Ratings over 2%
Terrestrial
Cable
Ratings over 1%
2,000
30
1,500
20
1,000
10
500
0
0
2011
2012
Note: Programs with average viewer ratings over certain levels are able to sell
advertisements in individual-rate packages / Source: CJ E&M, KDB Daewoo
04
05
06
07
08
09
10
11
12F
13F
Source: Advertisement Yearbook, Cheil Worldwide, KDB Daewoo Securities
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January 18, 2013
CJ E&M
2. Film: The K-film era is coming
From K-drama and K-pop
to K-film
In our view, the Korean wave is spreading from drama and music to film. The popularity of
Korean dramas in Japan has leveled up the quality and profitability of Korean dramas. In
addition, the K-pop phenomenon since the mid-2000s has given rise to the growth of the
record labels of TVXQ, GirlsÊ Generation, Big Bang, Psy, etc.
In our view, film is the most comprehensive type of content, integrating images, music,
story, and actors. Thanks in large part to established global distribution networks, film
appears to be the content type for which consumers are most willing to pay.
An increasing number of Korean films are receiving awards at international film festivals.
However, most of them are made by directors at the fringes of the film industry and failed to
achieve commercial success. As CJ E&M is KoreaÊs leading producer and distributor of films
with popular appeal, we expect the company to introduce films that are both commercially
and artistically successful in the near future. Of note is that The Weinstein Company, which
recently picked up distribution rights for Snowpiercer, an upcoming thriller in which CJ E&M
has invested, is well known for producing and distributing high-quality, award-winning films.
We project CJ E&MÊs movie business will display strong performances this year on the back
of 1) the expansion of its audience base, 2) the recovery of audience market share in the
distribution market with stronger movie lineups, and 3) the release of global film projects.
CJ E&MÊs market share
(in terms of audience)
expected to rebound to
over 30%
1) First, we believe the companyÊs film distribution revenues will improve in 2013. Last year,
the companyÊs lineup was weak in 1H. In addition, the release of a movie scheduled for
2Q12 was delayed by nine months. As a result, the companyÊs audience market share in
dropped from over 30% to around 20%.
However, its audience share is expected to improve this year as films produced by wellknown Korean directors and starring popular actors/actresses (e.g., The Berlin File, Last
Stand, G.I. Joe: Retaliation, Snowpiercer) are lined up for release through 1H13.
Figure 13. Market shares of movie distributors in Korea
(%)
40
CJ E&M
Mediaplex
Lotte Entertainment
Next Entertainment (NEW)
Sony Pictures
Warner Bros. Korea
30
20
10
0
05
06
07
08
09
10
11
12
Source: Korean Film Council, KDB Daewoo Securities Research
10
January 18, 2013
CJ E&M
2) Copyright-related revenues will likely become a key determinant for overall revenues and
operating profit. In particular, since CJ E&M has been increasingly investing in the
production of films, the companyÊs share of profits from box office success will likely grow.
Indeed, CJ E&M has invested in most of the aforementioned films slated for distribution in
1H.
Notably, we expect CJ E&M to display a higher global sales contribution this year, backed by
the release of the companyÊs global film projects, including Snowpiercer. CJ E&M, which
invested in the upcoming sci-fi thriller, will be its domestic distributor. For overseas
distribution, the company signed a contract with The Weinstein Company. As such, global
box office sales will likely take on more importance.
CJ E&MÊs global projects to be released this year include Cooktales (starring Michelle Yeoh,
Super Junior's Henry Lau; jointly produced with a Chinese studio)’, Cobu (starring BoA; 3D
Hollywood movie), Gift (Korean film remake; jointly produced with a Chinese studio)’, Dino
Time (animated; to be released in the US), and Pororo, the Racing Adventure (animated; to
be released in Korea and globally).
14. The Berlin File to be released on January 31st
Figure 15. Director Kang Woo-sukÊs Fist of Legend to be released in
April
Note: Director: Ryu Seung-wan
Source: CJ E&M
Note: Director Kang Woo-suk; Starring Hwang Jung-min and Yoo Joon-sang
Source: CJ E&M
Figure 16. Director Bong Joon-hoÊs Snowpiercer (2013)
Figure 17. Market share ranking of The Weinstein Company
(distributor of Snowpiercer)
05
06
07
08
09
10
11
12
(YTD)
13
1
The Artist (US-France,
Oscar-winner)
6
11
16
Miss Potter (British)
Sicko
(US)
Nine
(US SF film)
The King's Speech
(British,
Oscar-winner)
Django
Unchained
(US)
The Intouchables
(French)
Boy A
The Weinstein brothers left
Miramax to found The Weinstein (British)
Company
(ranking)
21
Source: CJ E&M
Note: Market share based on revenues; 2013 figure (YTD) is cumulative as of
January 10th / Source: iMDB, Wikipedia, KDB Daewoo Securities Research
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January 18, 2013
CJ E&M
Table 4. 2013 CJ E&MÊs film line up
Release date
Title
My Little Hero (investment, distribution)
Jack Reacher (import, distribution)
The Berlin File (investment, distribution)
Hansel and Gretel: Witch Hunters (import, distribution)
The Last Stand (distribution)
Feb 28
Flight (import, distribution)
February
Behind the Camera
March
G.I. Joe: Retaliation (distribution)
April
Fist of Legend
1H13
Final Negotiator
1H13
Influenza
1H13
AM 11:00
1H13
Accomplice
1H13
Graying Family
1H13
Miracle
1H13
Story
Summer
Snowpiercer
2H13
Roller Coaster
2013
Kkangchuli
2013
The Way Home
Note: Based on release dates in Korea as of January 2013, ,
Source: Company data, press, KDB Daewoo Securities Research
Jan 9
Jan 17
Jan 31
Feb 14
Feb 21
Director
SH Kim
Christopher McQuarrie
SW Ryu
Tommy Wirkola
JW Kim
Robert Zemeckis
JY Lee
Jon Chu
WS Kang
SJ Lee
SS Kim
HS Kim
DS Kuk
HS Song
HY Kwon
YK Kim
JH Bong
JW Ha
GT Ahn
EJ Bang
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January 18, 2013
CJ E&M
3) The domestic film market environment has improved on: 1) the spread of multiplex
cinemas and 2) the expansion of the audience base. In 2012, audiences increased by 22%
YoY, while the number of films screened climbed by 16% YoY. In particular, the number of
Korean film audiences surged by 38% YoY, exceeding the 100mn mark for the first time.
Against this backdrop, CJ E&MÊs content success will likely gain momentum this year, as
the company should exhibit a massive lineup of quality films. In particular many star directors
are set to make comebacks. Indeed, CJ E&M will distribute the films of Ryu Seung-wan
(January), Kim Ji-woon (February), Kang Woo-suk (April), Kim Seong-soo (1H), and Bong
Joon-ho (summer) this year.
Figure 18. Multiplex cinemas on the rise: Numbers of films screened and audience are increasing
(mn)
(films)
Audiences for foreign films (L)
200
Audiences for Korean films
topped 100mn in 2012
Audiences for Korean films (L)
1,200
Number of films screened (R)
150
900
100
600
50
300
0
0
05
06
07
08
09
10
11
12
Source: Korean Film Commission, KDB Daewoo Securities Research
Figure 19. 2013: Four major directors to make comebacks; CJ E&M to distribute their films
Note: Starting from the left, Bong Joon-ho (Director of Snowpiercer; CJ E&M is the investor and distributor:),
Ryu Seung-wan (Director of The Berlin File, CJ E&M is the investor and distributor),
Kim Ji-woon (Director of The Last Stand, CJ E&M is the domestic distributor),
Park Chan-wook (Director of Stocker to be distributed by 21st Century Fox and the producer of Snowpiercer)
Source: Cine21
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January 18, 2013
CJ E&M
3. Game: Showing signs of bottoming out
1) New games to be released
The game division to
turn around
The game division has weighed on CJ E&MÊs earnings over the past two years. The
companyÊs game revenues started to fall after its failure to renew its publishing contract for
Sudden Attack. Worse, revenues at the companyÊs web board game unit, which had been
profitable and attracted steady traffic, also dropped due to regulatory issues. Meanwhile, the
game division embarked on in-house game development projects to address the publishing
business risk, incurring higher costs. New online games that had been scheduled to be
released in 2012 have been delayed, leading to operating losses.
The launching schedules
of online games that
were delayed are being
confirmed
However, the company is expected to launch its in-house developed games in 2013,
boosting the revenues and profitability of its game business. The launching schedules of the
companyÊs new online games that were delayed are now being confirmed. The company
conducted the second closed-beta test (CBT) for its new RPS game Gunz 2 on January 3rd.
In addition, the company performed a guerrilla test for its soccer game Cha9Cha9 on January
5th and is planning to hold a pre-open-beta test (CBT) on January 17th. Furthermore, the
company will conduct the second CBT for an MMORPG Monarch on January 14.
CJ E&M has launched smartphone games on KakaoTalk since 2H12. In particular, Everybody
Cha Cha Cha, which was developed by Turn-on Games (100% owned by CJ E&M) and
launched for KakaoTalk in end-2012, ranks first in terms of both free downloads and
revenues on Google Play. Given that KakaoTalk games ranked first typically generate daily
average revenues of W500mn, quarterly revenues from Everybody Cha Cha Cha are forecast
at W30-45bn.
Mobile games have high
growth potential
CJ E&M, which released about 20 mobile games in 2012, is expected to launch more than
50 mobile games in 2013. Mobile game revenues are expected to rise from W2.3bn in 2011
to W8.5bn in 2012. In 2013, mobile game revenues will likely increase further on an increase
in the number of game releases. The proportion of mobile game revenues out of the
companyÊs total game revenues stood at only 1% in 2011 and 4% in 2012. However, the
figure is expected to exceed 10% in 2013.
With the rising growth potential of CJ E&MÊs mobile game business, the revenues and
market caps of mobile game developers and publishers on the KOSDAQ deserve attention.
Gamevil, whose revenues came in at W43bn in 2011 and are forecast at W71bn in 2012, has
a market cap W596bn. Com2uS (with 2011 revenues of W36bn and 2012F revenues of
W80bn) has a market cap of W468bn.
Table 5. New gameÊs test and release schedule
Date
Title
Platform
Magu Manager
Online
Everybody Cha Cha Cha
Mobile (KakaoTalk, Android)
Gunz 2
Online
EveryoneÊs Monarch Minigame
Online
Ildaejongsa
Online (Web)
Monarch
Online
Cha9Cha9
Online
Magyechon Online
Online
Magu the Real
Online
Ildaejongsa
Online, Mobile
Zipi Racing
Online (Web)
Source: CJ E&M, press, KDB Daewoo Securities Research
Dec 13
Dec 31
Jan 3
Jan 4
Jan 10
Jan 14
Jan 17
1Q13
1Q13
1Q13
1Q13
Genre
Stag
Sport
Racing
RPS (RPG + FPS)
RPG
RPG
MMORPG
Sport
MMORPG
Sport
RPG
Racing
OBT
Release
2nd CBT
Release
CBT
2nd CBT
Pre-OBT
Release
Release
Release
Release
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January 18, 2013
CJ E&M
Figure 20. Smartphone game Everybody Cha Cha Cha (ranked 1st
with more than 5mn downloads)
Figure 21. Smartphone game Jumping Star (with more than 5mn
downloads)
Note: The developer TurnOn games is a spin-off of CJ Games (with a 100%
ownership) Source: CJ E&M, Google Play
Note: CJ E&M holds a 30% equity ownership in the developer Blue Pepper
Source: CJ E&M, Google Play
Figure 22. New online game Hounds (RPS: RPG+FPS)
Figure 23. New online game Gunz 2 (FPS)
Note: The developer CJ GamLab is a subsidiary of CJ Games
Source: CJ E&M
Note: The developer is Miet Entertainment
Source: CJ E&M
15
January 18, 2013
CJ E&M
Figure 24. New online game Magu: the Real (Sports: Baseball)
Figure 25. New online game Cha9Cha9 (Sports: Soccer)
Note: The developer Anypark is a subsidiary of CJ Games
Source: CJ E&M, This Is Game
Note: The developer Anypark is a subsidiary of CJ Games
Source: CJ E&M
Figure 26. New online game Monarch (MMORPG)
Figure 27. New online game Magyechon (MORPG)
Note: The developer Anypark is a subsidiary of CJ Miaus Games
Source: CJ E&M
Note: The developer Seed9 Games is a subsidiary of CJ Games; co-developed
by Capcom / Source: CJ E&M
Figure 28. New web game Zipi Racing (casual racing)
Figure 29. New web game Il Dae Jong Sa (RPG)
Note: The developer is Zipi Studio
Source: CJ E&M
Note: The develop is YooJoo (Chinese)
Source: CJ E&M
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January 18, 2013
CJ E&M
2) Trends in mobile games
KakaoTalk: A dominant
mobile gaming platform
in Korea
KakaoTalk has emerged as a dominant mobile gaming platform in Korea. Games on
KakaoTalk spread rapidly among users, and are an effective way to increase the number of
mobile items purchased through the service by creating competition among friends for such
items. However, KakaoTalk is shortening the life cycle of mobile games by keeping the
intervals between new game launches relatively short. KakaoTalk is releasing roughly one
game per week.
The growth of KakaoTalk has followed the trajectory of Naver (owned by NHN). Naver grew
its online business - attracting users and boosting traffic - by creating a user-friendly
environment through blogs and other content in its web portal; NHN then monetized user
traffic to the Naver portal. NHNÊs mobile gaming business (e.g., Hangame) was the first of
the Naver services to generate earnings.
KakaoTalk has also attracted a substantial number of users via its messaging service, and is
offering an increasing number of new services, such as advertising, games, e-mail, photos,
fashion services, and other content (to be launched in 1Q). Among these services, the
gaming business was the first to generate a profit, and currently generates the largest
revenues and profits (we project). We expect KakaoTalk to continue introducing games in
short intervals, as the gaming business is key to the companyÊs growth.
Figure 30. Monthly Android-based game users: Most top games were released by KakaoGame
('000 people)
15,000
12,000
Dragon Flight for Kakao
Anipang for Kakao
Modui for Kakao
Tapsonic Ringstar for Kakao
Candy Pang for Kakao
I Love Coffee for Kakao
BounceBall (Android)
QuizKing for Kakao
TinyFarm (Android)
9,000
6,000
3,000
0
8/12
9/12
10/12
11/12
12/12
Source: Korean click, KDB Daewoo Securities Research
Figure 31. KakaoÊs total monthly unique visitor trend
(mn person)
Kakao
25
KakaoTalk Plus Friend released in Oct. 2011
KakaoCard released in Dec. 2011
20
KakaoStyle
released in Sep. 2012
KakaoGame
released in July 2012
KakaoStory
released in Mar. 2012
15
10
5
1/12
2/12
3/12
4/12
5/12
6/12
7/12
8/12
9/12
10/12
11/12
12/12
Source: Korean Click, KDB Daewoo Securities Research
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January 18, 2013
CJ E&M
Several new apps emerge every day in the global mobile gaming industry. KakaoTalk has
shortened the interval between new games in Korea. And creativity is no longer a factor in a
gameÊs success; we are finding that a well-made copycat generates stronger revenues than
a new „creative‰ game.
The mobile gaming market is comparable to the movie/drama markets. Copycat,
controversial movies and dramas often enjoy strong ticket sales and high viewership. The
life cycle of movies and dramas is also relatively short (only two~three months).
In this type of market, only distributors of content can consistently release new offerings,
and then adequately market that content. Distributors can greatly boost their earnings by
investing in content production, and producing one successful piece of programming per
quarter. CJ E&MÊs movie business is a good example, and we expect a similar model to
work in the mobile gaming market. In the movie market, distributors have a great deal of
power over producers. We expect gaming portals that can publish, produce, and invest in
their own content to also dominate the mobile gaming market.
Figure 32. Life cycles of games
(users)
3,000
Online MMORPG
Online casual
Mobile general
Mobile KakaoTalk
0
Release
3 months
6 months
1 year
2 years
More than 3 years (시간)
Table 6. Major online game companies started to release hit smartphone game in November 2011
Term
Title
Publisher
Developer
Nov. 3-4 week,
Dec. 1 week
Game for Everyone
NCsoft
HOTDOG Studio
(Subsidiary)
Dec 2-3 week
Dec 4-5 week
Jan 1-2 week
TapSonic Ringstar
Neowiz Internet
Touch Fighter
WeMade
Neowiz Internet
WeMade
Everybody Cha Cha Cha
CJ E&M
TurnOn Games
(subsidiary)
Source: Yonhap News Agency, Rankey.com, Google Play, KDB Daewoo Securities Research
18
January 18, 2013
The Korean mobile
gaming market had a
CAGR of 17% during
2007-2012; we expect a
CAGR of 10% over the
next five years
CJ E&M
We estimate the Korean mobile gaming market had a CAGR of 17.0% during 2007-2012.
However, we forecast this growth to decrease to 10.1% during 2012-2016. We also expect
growth in the global mobile gaming market to slow for the following reasons:
1) The industryÊs initial period of hyper-growth is ending. 2) Smartphone operating system
makers, telecom carriers, and mobile platforms are all trying to get a piece of the gamingapps pie. Additionally, as more developers enter the market, the number of new games is
surging (and the interval between releases is shortening). 3) Most users are only light users.
4) Small devices make it hard to play sophisticated games for a long period of time.
Nevertheless, we would expect further growth in the mobile gaming industry with: 1)
industry restructuring, 2) an increase in the number of heavy users, and 3) an expanded
catalogue of gaming genres.
Figure 33. Korean mobile game market size and expectations
(US$mn)
3,500
Korea mobile game market
CAGR: 10.1%
2,800
2,100
1,400
700
0
07
08
09
10
11
12F
13F
14F
15F
16F
13F
14F
15F
16F
Source: PwC, KDB Daewoo Securities Research
Figure 34. Global mobile game market size and expectations
(US$mn)
16,000
Global mobile game market
CAGR: 10.1%
12,000
8,000
4,000
0
07
08
09
10
11
12F
19
January 18, 2013
CJ E&M
3) Status of online game industry
KoreaÊs online game
market is huge, at W2tr
per year
Some analysts speculate that KoreaÊs online game market is contracting, with the countryÊs
largest online game maker suffering from competition with foreign brands and the growth of
mobile games. However, the market is still growing (currently W2tr), although not as rapidly
as in the past. Going forward, we expect the online game industry to expand at an average
rate of 9.5% per year.
Dedicated users and
long life cycle
The merits of online games include: 1) a large number of dedicated/heavy users and 2) a
long life cycle after release. CJ E&MÊs new game lineup includes MMORPGs (long life cycle),
sports games and first-person shooter games (dedicated users).
The mobile game industry, although comparable to online games in size, does not have the
aforementioned merits. Players are less dedicated, and life cycles are shorter because
games are quickly released through app stores.
Figure 35. Korean online game market size and expectations
(US$mn)
3,000
Korea online game market
CAGR: 9.5%
2,400
1,800
1,200
600
0
07
08
09
10
11
12F
13F
14F
15F
16F
13F
14F
15F
16F
Figure 36. Global online game market size and expectations
(US$mn)
25,000
Global online game market
CAGR: 15.1%
20,000
15,000
10,000
5,000
0
07
08
09
10
11
12F
20
January 18, 2013
CJ E&M
4. Music, performance, online businesses are expanding
1) Music and performance
CJ E&M is cementing its presence in the music and performance industries. In 3Q12, the
companyÊs revenues from relevant business units climbed 45.4% YoY.
Music management
business to resume
With the opening of M Academy, the company will resume its management business. In
addition, its music content competitiveness is strengthening on various platforms (broadcast,
online and mobile), with music sales/promotion channels broadening. If the companyÊs
entertainers gain popularity via the companyÊs strong management capabilities and
infrastructure, the music division should be able to enjoy structural OP margin growth.
Musical exports to Japan
and China rising
The performance business also looks promising, as the number of musical goers are
increasing, and the companyÊs market share is rising. The musical market is estimated at
W300bn as of 2012, and CJ E&M engaged in the production/exports of over 30 musicals last
year. Including revenues from co-produced musicals, the companyÊs market share is
approximately 35%.
The OP margin of the companyÊs performance business is also likely to improve thanks to
musicals developed in-house. Currently, licensed musicals account for 80% of the Korean
musical industry, and, in 2012, less than 10 homegrown musicals made the top 50 list in
terms of revenues. To ensure long-term growth, musical demand should rise nationwide
(currently, demand is high only in Seoul), and the production of homegrown musicals should
increase.
CJ E&M is the undisputed leader of KoreaÊs musical industry growth. The company will stage
seven musicals in Japan this year. Moreover, it established United Asia Live Entertainment in
partnership with a Chinese company, and plans to perform musicals in China.
Figure 37. Value chain of music division
Distribution
Production
Production
Scheduling
Broadcasting
Service
Content consumption
Distribution
Mnet broadcasting channel
Cable TV SO, TV
Mnet.com, interest.me
Online PC
CJ E&M app, TVing (CJ HelloVision)
Smartphone, MP3
Superstar K and other
music programs
Online
CDs,
Digital music
+
Management
Mobile
Table 7. 2013 musical lineup
Category
Title
Sweet, Come to Me Stealthily, Scarlet Pimpernel, High School Musical
Bonnie and Clyde, Sunny, Bodyguard
Wild Young-ae, Poongwallju, Find Kim Jong-wook, Bibap
Broadway 42nd Street, Jekyll and Hyde, Wicked, The Three Musketeers,
Dream Girls, Spamalot, Jesus Christ Superstar
Source: CJ E&M, Press, KDB Daewoo Securities Research
Premieres
Film originals
Popular
Co-productions
21
January 18, 2013
CJ E&M
2) Digital business based on rich content pool
Amid transition to
mobile, content is
gaining in importance
KoreaÊs online portals have been struggling to survive the transition from online to mobile.
Some companies found growth momentum in their efforts to adapt (e.g., NHNÊs LINE), but
most portals have fared poorly. KTH, a subsidiary of KT, shut down its portal site Paran and
streamlined its businesses. The company is now focusing on providing a photo-sharing
application Pudding. SK Communications, a subsidiary of SK Telecom, carried out workforce
restructuring as: 1) traffic to Cyworld (an online social networking service) has declined and
2) NateOn (the most popular online messenger service in Korea) has failed to enter the
mobile market.
Leading internet portals were slow in responding to the dawn of the mobile era, as they
could not easily give up existing businesses. Furthermore, expansion to mobile markets
could have resulted in conflicts of interest.
CJ E&M launched
interest.me based on its
rich content pool
While portal companies created platforms first and expanded content afterwards in their
effort to generate traffic, CJ E&M, drawing upon its rich content pool, launched interest.me
(a content network platform).
Figure 38. iPhone app version of interest.me
Source: CJ E&M, iTunes
Figure 39. Unique visitor and page view trends for interest.me
('000)
3,500
3,000
('000)
30,000
Unique visitors (L)
Page views (R)
25,000
2,500
20,000
2,000
15,000
1,500
10,000
1,000
5,000
500
0
0
7/12
8/12
9/12
10/12
11/12
12/12
Source: Online traffic, Korean Click, KDB Daewoo Securities Research
22
January 18, 2013
CJ E&M
5. CJ E&M in the CJ Group
CJ E&MÊs media and
content businesses to
improve the CJ GroupÊs
brand image and add
value
The CJ Group has established a diversified business portfolio, encompassing food,
distribution, entertainment, and infrastructure. Its media and content business is expected to
improve the CJ GroupÊs brand image and add value.
CJ Corporation, a holding company for the CJ Group, boasts strong business stability based
on the diversified businesses of its key subsidiaries. Its earnings primarily consist of dividend
income, royalty income, and rent. Based on its strong asset value, the company can afford
to provide financial support for subsidiaries.
The CJ Group is expanding beyond its food business to service and biopharmaceuticals. It
strengthened its logistics business by acquiring Korea Express. CJ Korea Express is
scheduled to merge with CJ GLS, which should create synergies in overseas logistics.
CJ Group companies are dominant players in the cable TV and film markets. In the pay-TV
and film content markets, the CJ Group has achieved vertical integration of processes from
production to distribution. If ownership control in the pay-TV market is eased, the business
environment for cable SOs and PPs is expected to become more favorable.
Meanwhile, the CJ Group appears to be determined to expand its film businesses overseas.
CJ E&M participates in the production of foreign movies as an investor or co-producer. In
2H12, the company consolidated its domestic and overseas operations. Meanwhile, CJ CGV
do not have much has room for growth in Korea due to the limited size of the domestic
market and its already-high market share. Thus, the company is expanding its multiplex
business in China and Vietnam.
Meanwhile, the CJ Group is preparing to launch a celebrity management business in addition to
its existing music businesses (e.g., music cable channel and digital music investment/distribution).
CJ E&M is also organizing and promoting idol groupsÊ overseas concerts.
Figure 40. CJ E&M and the CJ GroupÊs media subsidiaries
45%
51%
Jam Studio
52%
Nurien Soft
100%
Turnon Games
Note: As of 3Q12
23
January 18, 2013
CJ E&M
Figure 41. CJ GroupÊs corporate governance chart (CJ E&M, CJ HelloVision)
Lee Jae-hyun
100%
88.0%
CJ
CJ
(001040
(001040KS)
KS)
100%
CJ MD One
100%
CJ
CJ Seefood
Seefood
(011150
(011150 KS)
KS)
46.5%
Youngwoo
100%
Don Don
Farm
39.1%
CJ
CJ CheilJedang
CheilJedang
(097950
(097950 KS)
KS)
40.1%
60.9%
86.7%
40.2%
CJ
CJ Korex
Korex
66.9%
20.1%
93.2%
CJ
CJ O
O Shopping
Shopping
SA
Management
100%
CJ Olive Young
CJ GLS
66.3%
4D Plex
Primus Cinema
D-Cinema of
Korea
100%
Super Race
60.3%
CJ
CJ HelloVision
HelloVision
(037560
(037560 KS)
KS)
100%
CJ Telenix
60.0%
E&C Infra
CJ
CJ CGV
CGV
(079160
(079160 KS)
KS)
98.8%
Baduk Television
68.8%
Mediaweb
67.0%
CJ NGC Korea
100%
52.5%
74.1%
AZworks
100%
99.9%
CJ E&C
CJ
CJ Freshway
Freshway
(051500
(051500KS)
KS)
CJ IG
Art Service
50.0%
East Busan
Theme Park
100%
100%
100%
On Game
Network
66.2%
CJ PowerCast
CJ Systems
40.1%
50.0%
CJ N City
Orion Cinema
Network
41.4%
100%
92.7%
CJ
CJ E&M
E&M
(130960
(130960 KQ)
KQ)
(035760
(035760 KS)
KS)
(000120
(000120 KS)
KS)
Super Feed
90.3%
37.0%
20.1%
Frozen Food
CJ Venture
Investment
43.5%
Sinuido Salt
Woosung
90.0%
C&I Leisure
Industry
& affiliates
51.8%
82.5%
17.5%
HB PFV
C&I Leisure
Industry
100%
AniPark
CJ Sports
Good Concert
KMTV
International
Media Genius
96.3%
CJ Foodville
51.0%
CJ Games
Note: As of September 2012, Source: KDB Daewoo Securities Research
24
January 18, 2013
CJ E&M
6. Risks
We see some risk of slower-than-expected earnings growth, given that: 1) the scheduled
release of new games in 1H13 will likely put upward pressures on marketing spend and 2)
the game unitÊs expenses are likely to outweigh revenues again this year.
The game and movie
divisions are vulnerable
to the performances of
their titles
Indeed, we note that the game division faces greater uncertainties than other businesses.
The company has been shifting its focus from publishing to in-house development, but has
yet to prove its development capabilities. KoreaÊs online game market has somewhat
matured, while, on the mobile side, games serviced by KakaoTalk have been seeing shorter
life cycles. We thus maintain a conservative view on CJ E&MÊs new titles, especially given
increasingly intensifying market competition.
The movie division is also exposed to some uncertainties, as earnings hinge on box office
performance. The production for the movies The Berlin File (set for release in 1H13) and
Snowpiercer (in 2013) is likely to be quite expensive, suggesting a higher break-even point.
The broadcasting division generates most of its revenues from cable ads, which are
sensitive to economic cycles. Any setbacks to the economic recovery could limit upside to
ad pricing, thus holding back top-line growth.
While the exposure to
intangible assets is high,
the companyÊs
accounting policy seems
conservative
Given CJ E&MÊs massive investments in content, we took a closer look at the companyÊs
intangible assets and related accounting policies (amortization, etc.). As a media giant that
provides a wide variety of content, CJ E&M has a higher portion of intangible assets relative
to smaller, listed music and drama production companies, which are more focused on a
single segment.
Roughly 70% of the firmÊs intangible assets are broadcast programs and 30% movie
copyrights. We view the higher exposure to broadcast content as a positive, as it allows the
firm to better recover its investments from license fees and ad sales via its pay TV channels.
As for movies, the company keeps its stake under 30% of total production costs, even for
large-scale productions.
We believe the company amortizes its content assets over a two to four year period under a
straight-line method, with copyrights accounting for nearly 90% of total amortization of
intangible assets. Following the merger into CJ E&M, game development costs have been
expensed on a quarterly basis. Thus, we see only limited risks of temporary losses or
amortization in the event of disappointing market performance.
25
January 18, 2013
CJ E&M
IV. Earnings outlook
1. Raise 2013F EPS by 6.8%
We revise up CJ E&MÊs 2013F EPS, revenues, and operating profit estimates by 6.8%,
6.5% and 5.7%, respectively. In terms of revenues, we raise our forecasts for broadcasting,
games, and movies and keep the rest unchanged. We maintain our 2013 OP margin forecast
for broadcasting and inch up movies by 1%p, but cut the game division by 1%p. We used
conservative estimates for the movie and game units, as both businesses are highly
dependent on the performances of their respective titles.
2. Across-the-board revenue and profit growth
Upside to ad prices in
broadcasting unit
For the broadcasting unit, we expect to see more ad pricing hikes, as the firm now has more
well-recognized season-based programs that enjoy stable viewership. Also, since the
increase in ad prices was modest over the past year due to the sluggish economy, we may
see a strong pickup once the economy gets back on track.
In 2012, a steady increase in the number of in-house productions caused the growth in
spending to overshadow any rise in ad pricing. This led to a dismal operating profit of less
than W1bn in 1Q12, although the situation began to normalize in 2Q to roughly W10bn.
In broadcasting, CJ E&M focuses primarily on series-based entertainment programs (e.g.,
audition shows, etc.) and dramas that have a targeted audience. In 2012, we saw a number of
new series produced by CJ E&M. Although it is difficult to raise ad prices for new programs
even if they become an instant success, we expect this situation to change in 2013.
We forecast game revenues to pick up in 2013 on the back of new title releases. That being
said, we took a more conservative view in light of high uncertainties surrounding the
potential success of new games, marketing burdens, and regulatory issues. Over the past
two years, CJ E&M had no new game momentum and suffered from deteriorating revenues
due to the failed renewal of the publishing contract for Sudden Attack and slower traffic at
existing games. In an effort to overcome these risks, the company has been pushing inhouse development, which has led to persistent development costs.
New title releases to
drive top-line recovery
After a long development period and many delays, the release dates for the companyÊs
major new titles are now becoming clearer (In 1Q alone, the company plans to launch 7-8
new titles). For online published games, we forecast revenue growth of around 20% YoY.
Online web board games, which account for 30% of game revenues, are not among the
companyÊs key focuses and also face regulatory risks. Thus, we estimate revenues will
decline 20% YoY.
Table 8. CJ E&M earnings forecast revisions
Previous
12F
Revenues
OP
NP
EPS
OPM
NPM
1,383
40
49
1,442
2.7
4.0
13F
1,549
94
52
1,501
6.1
3.7
Revised
12F
1,387
40
49
1,436
2.6
3.9
(Wbn, W, %)
13F
1,650
99
55
1,603
6.0
3.7
Change
12F
13F
0.3
0.0
0.2
-0.4
6.5
4Q12F movie division revised up; 2013 broadcasting, movie,
5.7
games divisions revised up
6.5 2013F movie OPM revised up, but game OPM revised down
6.8
Comments
Note: K-IFRS consolidated basis / Source: KDB Daewoo Securities Research
26
January 18, 2013
CJ E&M
As for smartphone games, the company plans to launch 40 new titles. We project the
companyÊs smartphone game revenues to surge from W8.5bn (from about 20 smartphone
games) in 2012 to more than W50bn. Our conservative estimate is based on: 1) the success
of Everybody Cha Cha Cha and 2) new game releases. Although the smartphone game
business unit is expected to post an operating loss in 1H due to higher marketing expenses
arising from an increase in new game launches, the unit will likely swing to profit in 2H. We
reflected a decrease in high-margin game item sales (in light of the likelihood of regulatory
issues) in our operating profit projection.
Film division to fare well
on: 1) a recovery in
distribution market share,
and 2) the release of
global film projects
3) The film division is expected to fare well this year, aided by 1) the expansion of the
audience base, 2) a recovery in the distribution market share arising from a massive lineup of
quality films, and 3) the release of global film projects. In particular, CJ E&MÊs share of
profits from box office success will likely grow, as: 1) the company has been increasingly
investing in the production of films; and 2) it will generate additional revenues related to
global distribution and copyrights. Therefore, we project the film divisionÊs annual OP margin
to exceed 5%, which would mark a historic high.
Table 9. CJ E&M quarterly and annual earnings and forecasts
Revenues
Broadcasting
Games
Movie
Music/Performance/Online
Operating profit
Broadcasting
Game
Movie
OP margin
Broadcasting
Games
Movie
Net profit
NP margin
YoY growth
Revenues
Broadcasting
Games
Movie
Operating profit
Broadcasting
Games
Movie
Net profit
(Wbn,%)
2013F
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12F
2011
2012F
273
129
76
31
38
15
2
13
-1
1
5.5
1.8
16.7
-3.2
2.9
3
1.2
323
174
67
45
36
35
24
8
3
0
10.9
13.8
11.6
7.6
0.3
33
10.3
317
169
55
54
39
13
9
4
1
-1
4.1
5.2
6.4
2.4
-1.5
11
3.5
367
199
60
62
46
14
15
3
1
-6
3.7
7.6
4.7
2.1
-12.5
11
3.0
321
162
60
62
37
-3
1
1
-1
-3
-1.0
0.3
1.3
-2.1
-8.9
-1
-0.3
331
209
54
26
43
10
18
-2
-5
-2
2.9
8.5
-3.0
-18.8
-4.2
33
9.9
341
187
49
48
57
13
15
-3
4
-3
3.9
8.2
-5.9
8.1
-5.5
5
1.4
394
209
49
69
67
20
17
-4
8
0
5.2
8.2
-7.6
10.9
-0.5
12
3.1
1,279
672
258
191
158
77
50
27
5
-5
6.0
7.5
10.4
2.6
-3.2
59
4.9
1,387
767
211
204
204
39
51
-7
5
-9
2.8
6.6
-3.5
2.6
-4.2
49
3.9
1,650
903
270
250
227
99
81
8
15
-5
6.0
9.0
3.0
6.0
-2.0
55
3.7
18.1
19.8
18.1
-3.1
47.1
89.8
-185.2
4.1
-242.9
-150.0
24.5
21.4
8.6
79.9
26.0
198.1
400.0
129.4
0.0
-50.0
10.1
28.3
-20.2
7.8
0.5
-34.2
2100.0
-70.3
-78.3
-137.5
15.6
20.8
-14.9
91.4
-12.3
-36.3
-6.2
-46.2
-148.1
-319.2
17.4
25.7
-21.2
RR
-1.6
TTR
-78.3
-93.7
RR
TTR
TTR
2.6
20.0
-20.1
-43.1
17.9
-72.9
-25.8
TTR
TTR
RR
-1.8
7.7
10.6
-10.4
-10.4
45.4
1.8
73.9
TTR
200.0
RR
-57.8
7.4
4.6
-18.6
11.3
48.3
50.9
12.8
TTR
478.0
RR
11.5
16.8
22.5
-2.8
37.7
10.9
26.6
169.9
-17.8
-32.4
TTR
283.7
8.4
14.2
-18.0
6.8
28.8
-48.6
0.9
TTR
6.3
RR
-16.4
19.0
17.7
27.9
22.4
11.1
151.6
60.5
TTB
182.5
RR
12.8
Notes: K-IFRS consolidated basis; Merged in March 2011; 2011 net profit YoY growth is not included due to the absence of pre-merger data
27
January 18, 2013
CJ E&M
CJ E&M (130960 KQ/Buy/TP: W38,000)
Comprehensive Income Statement (Summarized)
(Wbn)
Revenues
Cost of Sales
Gross Profit
SG&A Expenses
Operating Profit (Adj)
Operating Profit
Non-Operating Profit
Net Financial Income
Net Gain from Inv in Associates
Pretax Profit
Income Tax
Profit from Continuing Operations
Profit from Discontinued Operations
Net Profit
Controlling Interests
Non-Controlling Interests
Total Comprehensive Profit
EBITDA
FCF (Free Cash Flow)
EBITDA Margin (%)
Operating Profit Margin (%)
Net Profit Margin (%)
Statement of Financial Condition (Summarized)
12/11
1,143
808
335
265
70
70
-7
9
0
63
19
44
15
59
57
2
60
58
2
361
-127
31.6
6.1
5.0
12/12F
1,387
980
406
367
40
37
-17
11
1
20
6
14
35
49
55
-5
50
56
-5
537
136
38.7
2.6
3.9
12/13F
1,650
1,134
517
417
99
99
-20
20
0
79
24
55
0
55
61
-5
57
62
-5
505
98
30.6
6.0
3.7
12/14F
1,835
1,261
575
434
141
141
-20
20
0
120
36
84
0
84
90
-5
86
91
-5
495
92
27.0
7.7
4.9
12/11
300
59
317
15
276
4
-64
-71
-5
-8
-12
-230
-21
-329
26
95
40
-2
-1
0
42
109
43
152
12/12F
554
49
497
14
484
20
15
-34
-1
39
-7
-324
-19
-329
-3
26
-27
-40
12/13F
432
55
450
15
391
-1
-49
-87
-1
40
-24
-317
0
-329
0
12
-32
0
0
0
-32
84
354
438
12/14F
427
84
411
13
341
-1
-32
-61
-1
28
-36
-317
0
-329
0
12
-32
0
0
0
-32
78
438
516
Cash Flows (Summarized)
(Wbn)
Cash Flows from Op Activities
Net Profit
Non-Cash Income and Expense
Depreciation
Amortization
Others
Chg in Working Capital
Chg in AR & Other Receivables
Chg in Inventories
Chg in AP & Other Payables
Income Tax Paid
Cash Flows from Inv Activities
Chg in PP&E
Chg in Intangible Assets
Chg in Financial Assets
Others
Cash Flows from Fin Activities
Chg in Financial Liabilities
Chg in Equity
Dividends Paid
Others
Increase (Decrease) in Cash
Beginning Balance
Ending Balance
(Wbn)
Current Assets
Cash and Cash Equivalents
AR & Other Receivables
Inventories
Other Current Assets
Non-Current Assets
Investments in Associates
Property, Plant and Equipment
Intangible Assets
Total Assets
Current Liabilities
AP & Other Payables
Short-Term Financial Liabilities
Other Current Liabilities
Non-Current Liabilities
Long-Term Financial Liabilities
Other Non-Current Liabilities
Total Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Stockholders' Equity
12/11
915
152
378
6
283
1,136
116
118
765
2,051
721
174
311
236
107
63
31
829
1,163
190
948
60
60
1,222
12/12F
1,215
354
459
7
316
973
117
130
558
2,188
724
211
233
280
152
105
35
876
1,224
190
948
115
88
1,312
12/13F
1,424
438
546
8
352
913
117
115
495
2,337
812
251
233
328
155
105
38
968
1,286
190
948
176
83
1,369
12/14F
1,589
516
607
9
378
897
117
102
482
2,486
874
280
233
361
158
105
40
1,031
1,377
190
948
265
78
1,455
12/12F
18.5
1.8
1.5
1.9
1,436
14,545
17,897
0
0.0
0.0
21.3
48.5
-47.8
-17.7
3.6
221.9
19.7
2.3
4.6
2.8
66.8
167.8
-7.3
2.3
12/13F
20.0
2.6
1.5
2.3
1,603
12,304
21,172
0
0.0
0.0
19.0
-5.8
171.5
11.7
3.6
220.0
19.5
2.5
4.8
7.8
70.7
175.3
-13.1
3.1
12/14F
13.6
2.7
1.3
2.1
2,362
11,702
23,895
0
0.0
0.0
11.2
-2.1
41.4
47.4
3.5
213.1
18.9
3.5
6.7
11.1
70.9
181.9
-17.7
4.4
Forecasts/Valuations (Summarized)
0
12
202
152
354
P/E (x)
P/CF (x)
P/B (x)
EV/EBITDA (x)
EPS (W)
CFPS (W)
BPS (W)
DPS (W)
Payout ratio (%)
Dividend Yield (%)
Revenue Growth (%)
EBITDA Growth (%)
Operating Profit Growth (%)
EPS Growth (%)
Accounts Receivable Turnover (x)
Inventory Turnover (x)
Accounts Payable Turnover (x)
ROA (%)
ROE (%)
ROIC (%)
Liability to Equity Ratio (%)
Current Ratio (%)
Net Debt to Equity Ratio (%)
Interest Coverage Ratio (x)
12/11
17.4
2.8
2.8
3.7
1,745
10,744
10,799
0
0.0
0.0
1,065.0
611.1
266.1
44.4
5.3
394.6
31.0
4.1
7.7
6.3
67.8
126.9
10.3
5.2
Source: Company data, KDB Daewoo Securities Research estimates
28
January 18, 2013
CJ E&M
Important Disclosures & Disclaimers
Disclosures
As of the publication date, Daewoo Securities Co., Ltd and/or its affiliates do not have any special interest with the subject company and do not own 1% or more of the
subject company's shares outstanding.
Stock
Ratings
Industry
Ratings
Buy
Relative performance of 20% or greater
(W)
Trading Buy
Relative performance of 10% or greater, but with volatility
80,000
Hold
Relative performance of -10% and 10%
60,000
Sell
Relative performance of -10%
40,000
Overweight
Fundamentals are favorable or improving
20,000
Neutral
Fundamentals are steady without any material changes
0
Underweight
Fundamentals are unfavorable or worsening
1/11
CJ E&M
7/11
1/12
7/12
1/13
* 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 analystÊs 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.
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 AnalystÊs 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.
29
January 18, 2013
CJ E&M
Distribution
United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within 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 Persons‰). This report is directed only at Relevant
Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents.
United States: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as
defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance 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.
Hong Kong: This document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and
Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional
investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder
and may not be redistributed in whole or in part in Hong Kong to any person.
All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Daewoo or its affiliates only
if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Daewoo and its affiliates to any registration or
licensing requirement within such jurisdiction.
KDB Daewoo Securities International Network
Daewoo Securities Co. Ltd. (Seoul)
Head Office
34-3 Yeouido-dong, Yeongdeungpo-gu
Seoul 150-716
Korea
Tel: 82-2-768-3026
Daewoo Securities (Hong Kong) Ltd.
Two International Finance Centre
Suites 2005-2012
8 Finance Street, Central
Hong Kong
Tel: 85-2-2514-1304
Daewoo Securities (America) Inc.
600 Lexington Avenue
Suite 301
New York, NY 10022
United States
Tel: 1-212-407-1022
Daewoo Securities (Europe) Ltd.
Tower 42, Level 41
25 Old Broad Street
London EC2N 1HQ
United Kingdom
Tel: 44-20-7982-8016
Tokyo Representative Office
7th Floor, Yusen Building
2-3-2 Marunouchi, Chiyoda-ku
Tokyo 100-0005
Japan
Tel: 81-3- 3211-5511
Beijing Representative Office
Suite 2602, Twin Towers (East)
B-12 Jianguomenwai Avenue
Chaoyang District, Beijing 100022
China
Tel: 86-10-6567-9699
Shanghai Representative Office
Unit 13, 28th Floor, Hang Seng Bank Tower
1000 Lujiazui Ring Road
Pudong New Area, Shanghai 200120
China
Tel: 86-21-5013-6392
Ho Chi Minh Representative Office
Centec Tower
72-74 Nguyen Thi Minh Khai Street
Ward 6, District 3, Ho Chi Minh City
Vietnam
Tel: 84-8-3910-6000
30

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