July 16, 2012 Industry Report Media (Overweight) Daewoo Securities Co., Ltd. Transforming into content players Jee-hyun Moon +822-768-3615 Initiate coverage on the media sector with Overweight rating
[email protected] KoreaÊs media sector appears to have reached a turning point, backed by increasing revenues from overseas markets, an easing regulatory environment, and improving media content. Against this backdrop, we initiate coverage of the Korean media sector with an Overweight rating. Our recommendation is premised on the following four assumptions: Major media firms are steadily transforming themselves into content providers, helped by in-house content production and rising use of smart devices. Revenue sources, which have been primarily driven by domestic revenues, are diversifying into overseas markets thanks to structural growth of global revenues. Key media beneficiary of easing regulations is the advertising sector, which is expected to steadily grow through improved and eased regulations related to the broadcast segment. Marketing campaigns arising from major events in 2012, such as the London Olympics and the presidential election, should provide a catalyst to the advertising segment. Cheil Worldwide is our top pick We present Cheil Worldwide (Reinstate/030000 KS/Buy/TP: W26,000) as our top pick. The company is expected to benefit from Samsung ElectronicsÊ marketing campaigns in the short term. Additionally, it is increasingly securing overseas customers and has plans to acquire foreign advertising agencies this year. The company is expected to be re-rated in the long term, if its global expansion efforts prove sustainable. We present Buy on KT Skylife (Reinstate/053210 KS/Buy/TP: W31,000).