Hana Securities noted on the 11th that the merger of CJ ENM's subsidiaries Tving and Wavve is expected to increase momentum for growth. They maintained a 'buy' investment opinion and raised the target stock price from the previous 77,000 won to 95,000 won, up 23%. The closing price of CJ ENM on the previous transaction day was 77,300 won.
Lee Gi-hoon, a researcher at Hana Securities, said, "The long-awaited merger between Tving and Wavve is now visible, and with the recovery of the advertising market and the easing of the ban on Korean cultural imports, the prolonged adjustment period following the decision to expand investment in Tving will come to an end."
Previously, the Fair Trade Commission made a conditional approval decision on the corporate merger between CJ ENM's subsidiaries Tving and Wavve on the 10th. This conditional approval requires maintaining the existing rate plan until the end of next year.
The researcher predicted, "This can be interpreted as a preliminary stage of the integration measures," adding, "After the merger, it will become the second-largest in terms of domestic subscribers with a combined total of 11.28 million, following Netflix (MAU 14.51 million)." Moreover, he anticipates significant synergies, as the number of subscribers will increase while production costs will decrease through the launch of combined rate plans.
Furthermore, the researcher judges that direct benefits are expected from the Lee Jae-myung government's cultural and arts policies.
He explained, "The government has pledged active support aimed at global branding of K-culture," while adding, "With active policies expected to stimulate domestic demand, a sharp recovery in the advertising market, which had seen a significant decline, is anticipated, with the first quarter (January to March) expected to be the low point."
The upcoming resumption of the Korea-China joint male idol audition in July is also seen as a positive factor. The researcher said, "Groups of male idols produced by CJ ENM, such as Wanna One, ENHYPEN, and ZB1, have never failed," adding, "This time, the contract period will be extended from the previous 2.5 years to 5 years, predicting sustainable revenue contribution."