[Alpha Biz= Paul Lee] On July 23, DB Financial Investment maintained its Buy rating on Innocean (KQ: 214320), setting a target price of KRW 24,000. The firm cited expectations of profitability improvement in the second half of the year due to cost efficiency efforts centered on labor expenses.



In a report released that day, DB analyst Eun-Jung Shin stated, “Despite a sluggish domestic and global advertising market, Innocean continues to maintain a stable volume of business from affiliates.”



For the second quarter of 2024, Innocean is projected to report revenue of KRW 245.8 billion and operating profit of KRW 37 billion, up 4.6% and 1.0% year-on-year, respectively. Shin added, “Operating profit is expected to be in line with the market consensus of KRW 38.7 billion.”



Shin explained, “Domestic gross profit is likely to remain stable despite the advertising downturn, thanks to ongoing affiliate campaigns such as PV5 and the IONIQ 6 facelift. Subsidiaries like The Purple and Innocean S also appear to be improving margins.”



Overseas markets, particularly in North America and Europe, are expected to post 6.5% year-on-year growth, although a drop in exchange rates and conservative affiliate campaign execution may slightly slow growth compared to the first quarter.



Looking ahead to the second half, the analyst noted that stable performance is anticipated from scheduled affiliate campaigns including EV5, Seltos full-change, Palisade full-change (overseas), IONIQ 9, and EV4. However, Shin cautioned that “growth may underperform expectations if captive clients adopt more conservative marketing strategies due to tariff impacts.”



Shin concluded, “No significant changes in marketing strategy have been observed thus far, and Innocean is expected to partially offset risks by expanding its share of non-affiliate clients both domestically and overseas.”

 

 

 

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