J Contentree(036420.KS)

J Contentree (036420.KS) To leap forward this year as true content provider

J Contentree’s 4Q19 OP is to arrive well below consensus. With slow earnings Company Comment │ Jan 16, 2020 growth for the film division looking inevitable, we lower our TP to W52,000. But, we adhere to a Buy rating, believing that with the OP contribution from its broadcasting division rising, the firm is well positioned to benefit from a favorable external environment (global OTTs, resuming sales to China). Buy (maintain) TP W52,000 (lower) Focus on higher OP contribution from broadcasting arm rather than CP (20/01/15) W43,550 stagnant growth at film division Sector Media/entertainment Kospi/Kosdaq 2,230.98 / 679.16 With sluggish earnings growth for its the film division appearing inevitable, we lower Market cap (common) US$541.6mn our TP on J Contentree by 12% from W59,000 to W52,000. In calculating our the new Outstanding shares (common) 14.4mn TP, we have applied a 2020E target EV/EBITDA of 13x (vs 2019E: 15x) for the 52W high (’19/04/24) W57,900 broadcasting division and 7x (vs 7.5x) for the film division. We have revised up our low (’19/08/26) W32,250 earnings forecasts for the broadcasting division in light of: 1) the securing of additional Average trading value (60D) US$4.8mn drama slots (Wednesday/Thursday); and 2) binding contracts with Netflix. However, we Dividend yield (2020F) 0.00% downwardly adjust our earnings projectuions for the film division to reflect likely slow Foreign ownership 4.2% box office peformance. On the other hand, with the OP contribution from its broadcasting Major shareholders division rising, the firm is well positioned to benefit from a favorable external Joongang Holdings and 1 other 33.3% environment (global OTTs, resuming sales to China). NPS 11.0% Share perf 3M 6M 12M Absolute (%) 26.4 -6.7 -18.3 2020: To leap forward as true content provider Relative (%p) 17.2 -13.0 -23.2 We expect J Contentree to emerge as a true content provider this year. The broadcasting 2018 2019E 2020F 2021F division’s contribution to overall OP should increase to over 40% in 2020 (vs 2019E: Sales 511.3 560.0 645.5 680.7 mid-20% range). Last year, the division greater internalized its content capabilities and secured certain levels of guaranteed annual overseas sales, helped by: 1) the acquisition Chg 21.7 9.5 15.3 5.5 of a drama production company and other equity investments; and 2) the inking of a OP 34.7 52.6 65.2 83.5 binding contract with Netflix (to provide 20 dramas over a three-year period to begin in Chg 4.2 51.6 24.0 28.1 May 2020). Moreover, new drama slots (Wednesday/Thursday) have been secured, and J OPM 6.8 9.4 10.1 12.3 Contentree’s new drama Ssanggap Pocha will be aired on these slots from this upcoming NP 18.4 19.2 27.7 36.3 May. And, produced by its subsidiary Film Monster, Now at our School is to represent J EPS 1,448 1,335 1,926 2,520 Contentree’s first Netflix original release. Chg 172.2 -7.8 44.3 30.8 P/E 30.8 28.9 22.6 17.3 4Q19 preview: Expectations high towards top-line growth, but keep P/B 1.9 1.6 1.6 1.5 eye on costs EV/EBITDA 9.5 4.4 4.4 3.4 ROE 7.4 5.5 7.5 9.0 On a consolidated basis, we estimate 4Q19 sales of W159.6bn (+19.6% y-y) and OP of Debt/equity 95.1 145.6 127.3 113.0 W10bn (136.7% y-y), with OP to come in well wide of the market projection. Net debt 1.3 -55.7 -101.6 -214.0 Broadcasting division: We size 4Q19 OP at W2.1bn (-15.1% y-y). Given the global Unit: Wbn, %, won, x Note 1: NP excludes minority interests broadcasting of dramas such as My Country, Chief of Staff S2, and Chocolate, there is a Note 2: EPS, P/E, P/B, ROE based on NP (excl minority interests) high possibility of an accelerated amortization of 60% for the company’s dramas whose Source: NH I&S Research Center estimates sales were recognized in 4Q19. In addition, we cannot rule out a possiblity that the firm was required to carry out additional amortization for unsuccessful dramas.

Film division: We estimate 4Q19 OP of W7.9bn (+378.1% y-y), believing that domestic box office sales climbed 5% y-y and that there were no significant chances of one-off costs occurence.

4Q19 preview (K-IFRS consolidated) (Unit: Wbn, %) 4Q19E 4Q18 1Q19 2Q19 3Q19 1Q20F Revised y-y q-q Previous Consen Sales 133.4 126.3 131.1 143.0 159.6 19.6 11.5 151.6 149.2 142.2 OP 4.2 11.1 16.3 15.3 10.0 138.1 -34.7 13.3 14.9 14.2 OPM 3.2 8.8 12.4 10.7 6.3 8.7 12.1 10.0 Hazell Lee, Analyst Pre-tax profit 0.3 8.3 15.3 12.2 8.2 2,633 -32.8 11.5 11.6 15.6 822)768-7535, [email protected] NP (excl minority interests) 1.6 4.0 7.4 4.2 3.7 131.3 -11.3 6.6 6.4 7.1 Source: WISEfn, NH I&S Research Center estimates J Contentree www.nhqv.com

Summary

J Contentree operates an in-house holding company business, and it also runs (through its subsidiaries) film and broadcasting businesses. It was listed on the Kospi in Oct 2019. Its major subsidiaries are Megabox (73.5% stake; film) and JTBC Contenthub (44.1% stake, broadcasting), with IP management being its in-house business. The firm’s film and broadcasting arms represented 44.7% and 42.3%, respectively, of its 1H19 sales. Megabox stands as the number-three player in the domestic theater market, boasting strong cost competitiveness against its peers. Its broadcasting business is in the process of building up references with global players. We present a Buy rating and a TP of W52,000.

Share price drivers/earnings momentum Downside risks

Export contracts with non-Netflix global OTTs Contract with Netflix limiting firm’s drama production capability for other global OTTs Rising production cost and resultant margin improvement for original series dramas commissioned by global OTTs Weakening original series production demand from global OTTs Resumption of exports to China upon lifting of Chinese Stalled exports to China should restrictions on Korean content government ban on Korean content remain in place Successful listing of film subsidiary Megabox Delay in Megabox listing

Cross valuations (Unit: x, %) Historical valuations (Unit: x, %)

PER P/B ROE Company Valuations 2017 2018 2019E 2020F 2021F 2019E 2020F 2019E 2020F 2019E 2020F Netflix 84.6 56.4 21.5 15.9 23.6 27.3 P/E 97.5 30.8 28.9 22.6 17.3 Disney 25.9 26.7 2.6 2.8 16.1 10.4 P/B 4.0 1.9 1.6 1.6 1.5 CJ ENM 17.4 13.8 1.1 1.0 6.9 8.1 P/S 1.5 1.1 1.0 1.0 0.9 Studio Dragon 66.0 41.2 5.6 5.0 8.9 12.9 ROE 5.3 7.4 5.5 7.5 9.0 AStory 263.3 33.4 6.4 5.6 2.2 18.2 ROIC 4.8 7.9 11.9 9.3 11.9 Source: FnGuide, Bloomberg, NH I&S Research Center Source: FnGuide, NH I&S Research Center

Historical key financials (Unit: Wbn, won, %)

2010 2011 2012 2013 2014 2015 2016 2017 2018 Sales 123 137 393 380 369 306 335 420 511 OP 1 4 43 38 36 33 29 33 35 OPM (%) 0.6 2.6 10.8 10.0 9.9 10.8 8.6 7.9 6.8 Pre-tax profit -20 17 29 14 19 30 35 24 34 NP -22 18 24 4 15 20 22 11 26 NP (excl minority interests) -24 18 12 -10 0 11 19 6 18 EBITDA 10 14 63 61 58 50 43 59 77 Capex 3 1 11 14 25 16 91 33 29 Free cash flow -10 12 59 7 30 7 -73 -36 -4 EPS (won) -6,190 2,744 1,523 -1,311 -8 1,207 1,591 532 1,448 BPS (won) 1,738 10,814 12,333 11,356 11,719 5,166 6,944 13,105 23,391 DPS (won) 0 0 0 0 0 0 0 0 0 Net debt 58 83 125 136 106 201 229 153 1 ROE (%) -607.1 40.0 13.2 -11.1 -0.1 15.0 26.3 5.3 7.4 ROIC (%) -0.1 5.8 28.4 6.5 10.7 11.9 6.7 4.8 7.9 DPR (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 DY (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net debt ratio (%) 364.5 101.8 94.9 98.3 64.0 256.4 183.4 65.1 0.3 Source: J Contentree, NH I&S Research Center

2 J Contentree www.nhqv.com

Focus more on greater OP contribution from broadcasting business than on stalled film business growth While lowering our TP to W52,000, we maintain a Buy rating on J Contentree. Despite disappointing box office sales growth, we predict that rising broadcasting OP contribution will easily make up for the film division’s sluggish performance this year.

TP lowered to We lower our TP by 12% to W52,000 to reflect the possibility of sluggish growth at J W52,000 Contentree’s film arm, which is to represent more than 50% of its overall 2020E OP. In calculating our new SOTP-derived TP, we switched the base year to 2020E, and applied a 2020E target EV/EBITDA of 13x (vs 2019E: 15x) for the broadcasting division and 7x (vs 7.5x) for the film division. Of note, the target EV/EBITDA multple for the broadcasting division is at a 15% discount to the average of global peers (15.5x), and that for the film division is the average of global peers in matured film markets.

Reiterate Buy But, we maintain a Buy rating as, with the OP contribution from its broadcasting division rating rising, the firm is well positioned to benefit from favorable external environments. In detail, we believe that the broadcasting division’s OP contribution will rise by more than 10%p y-y to the 40%-level this year, noting that: 1) an addition of new drama slots (Wednesday/Thursday; from May) should drive strong broadcasting sales growth (1.3x versus 2019’s); and 2) the contract with Netflix has secured a certain level of guaranteed minimum overseas sales. And, the higher that the OP contribution from the broadcasting business is, the greater will be the benefits the firm receives from improving external environments (intensifying global OTT competition; resuming exports to China).

SOTP valuation (Unit: x, %, Wbn, won, shrs) Multiple (x) Value Note Broadcasting (A) 544.2 Broadcasting business total EV/EBITDA 13.2 544.2 2020E; at a discount to average of global peers Film (B) 144.3 Value of its Megabox stake EV/EBITDA 7.0 144.3 2020E; the average of global peers (in matured markets) Net debt (C) -55.7 2020E EV (A)+(B)-(C) 744.2 EV/share 51,655 TP 52,000 Upside 19% Outstanding shares 14,406,898 Note: As for the broadcasting division, its operating value is the sum of J Contentree (non-consolidated) and a stake-weighted JTBC Contenthub’s earnings Source: NH I&S Research Center

3 J Contentree www.nhqv.com

Earnings forecasts (IFRS consolidated) (Unit: Wbn, won, x, %) 2018 2019E 2020F 2021F Sales - Revised 511.3 560.0 645.5 680.7 - Previous 541.9 635.1 662.8 - Change 3.3 1.6 2.7 OP - Revised 34.7 52.6 65.2 83.5 - Previous 55.8 68.7 81.9 - Change -5.7 -5.1 2.0 OPM - Revised 6.8 9.4 10.1 12.3 EBITDA 77.0 135.9 145.2 164.8 NP (excl minority interests) 18.4 19.2 27.7 36.3 EPS - Revised 1,448 1,335 1,926 2,520 - Previous 1,858 2,358 2,862 - Change -28.1 -18.3 -11.9 P/E 30.8 28.9 22.6 17.3 P/B 1.9 1.6 1.6 1.5 EV/EBITDA 9.5 4.4 4.4 3.4 ROE 7.4 5.5 7.5 9.0 Note 1: EPS, P/E, P/B, and ROE based on NP (excluding minority interests) Note 2: EPS changes are relative bigger than those for OP due to changing OP composition—broadcasting division’s OP contribution to rise in 2020, and J Contentree holds relatively lower stake in its broadcasting subsidiary JTBC Contenthub (stake: 44%) Source: NH I&S Research Center estimates

Quarterly earnings forecasts (Unit: Wbn, %) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19E 1Q20F 2Q20F 3Q20F 4Q20F 2018 2019E 2020F Sales 109.6 111.3 157.0 133.4 126.3 131.1 143.0 159.6 142.2 146.0 175.0 182.4 511.3 560.0 645.5 Cinema 70.4 64.8 102.2 79.7 73.8 82.0 91.5 84.3 82.0 77.5 98.0 88.3 317.2 331.5 345.7 TV 38.7 46.0 54.7 53.5 51.9 62.5 50.8 75.4 60.2 68.6 77.0 94.1 192.9 240.6 299.8 Adjustment for consolidation 0.5 0.4 0.2 0.1 0.6 -13.4 ------% y-y growth Sales 26% 15% 36% 10% 15% 18% -8.9% 20% 13% 11% 22.3% 14% 22% 10% 15% Cinema 3% 13% 21% -1% 5% 26% -10% 6% 11% -6% 7% 5% 9% 5% 4% TV 108% 17% 74% 33% 34% 36% -7% 41% 16% 10% 52% 25% 49% 25% 25% GP 50.8 56.0 70.3 60.3 59.3 61.7 68.9 67.9 65.9 61.3 77.5 77.7 237.5 257.8 282.4 GPM 46% 50% 45% 45% 47% 47% 48% 43% 46% 42% 44% 43% 46% 46% 44% OP 4.0 8.3 18.2 4.2 11.1 16.3 15.3 10.0 14.2 9.6 21.0 20.4 34.7 52.7 65.2 Cinema 3.1 1.7 15.0 1.7 5.5 15.6 11.1 7.9 8.9 6.6 14.5 8.8 21.4 40.1 38.8 TV 0.3 5.9 3.5 2.5 5.6 0.8 5.6 2.1 5.3 3.0 6.5 11.5 12.2 14.1 26.4 Adjustment for consolidation 0.6 0.7 -0.2 0.1 -0.0 -0.1 -1.4 - - - -0.0 - - - - OPM 4% 7% 12% 3% 9% 12% 11% 6% 10% 7% 12% 11% 7% 9% 10% OPM (cinema) 4% 3% 15% 2% 7% 19% 12% 9% 11% 9% 15% 10% 7% 12% 11% OPM (TV) 1% 13% 6% 5% 11% 1% 11% 3% 9% 4% 8% 12% 6% 6% 9% % y-y growth OP -23% -7% 71% -51% 176% 97% -16% 138% 28% -41% 37% 103% 4% 52% 24% Cinema -28% 67% 48% -87% 77% 833% -26% 378% 63% -58% 30% 12% -23% 87% -3% TV -64% -26% 606% TTP 1,657% -86% 60% -15% -6% 261% 17% 442% 126% 16% 86% NP (excl minority interests) 4.6 2.5 9.7 1.6 4.0 7.4 4.2 3.7 7.1 4.8 8.3 7.4 18.4 19.3 27.7 NPM 6% 6% 8% 0% 6% 9% 5% 4% 9% 6% 8% 7% 5% 6% 7% Note: One-off costs of W3.4bn (incentives) incurred at cinema division in 4Q18 Source: NH I&S Research Center estimates

4 J Contentree www.nhqv.com

Top-five box-office hits in 4Q19 (Unit: Wbn, mn pns, won) Release date Movie Revenue Attendance ATP Distributor '19.12 Ashfall 52.9 6.3 8,410 CJ ENM, DexterStudios '19.12 Frozen 2 48.3 5.8 8,380 Walt Disney Company Korea '19.12 Start-up 21.2 2.5 8,407 NEW '19.12 Ford V Ferrari 10.6 1.2 8,776 Walt Disney Company Korea '19.12 Jumanji: The Next Level 8.8 1.1 8,318 Sony Pictures Korea Dec 2019 box-office revenue 186.6 22.5 8,308 Dec 2019 revenue top-five hits 141.8 16.8 8,420 '19.11 Frozen 2 63.3 7.6 8,323 Walt Disney Company Korea '19.11 Black Money 18.3 2.2 8,440 Acemaker Movieworks '19.11 The Divine Move2: The Wrathful 18.3 2.1 8,574 CJ ENM '19.11 Terminator: Dark Fate 17.1 2.0 8,660 Walt Disney Company Korea '19.11 Kim Ji Young, Born 1982 15.6 1.8 8,431 Lotte Culture Works, Lotte Entertainment Nov 2019 box-office revenue 155.4 18.6 8,354 Nov 2019 revenue for top-five hits 132.5 15.7 8,428 '19.10 Joker 43.9 5.1 8,648 Warner Brothers Korea '19.10 Crazy Romance 24.3 2.8 8,535 NEW '19.10 Kim Ji Young, Born 1982 14.6 1.8 8,043 Lotte Culture Works, Lotte Entertainment '19.10 Maleficent 2 10.5 1.2 8,459 Walt Disney Company Korea '19.10 Perfect Man 9.6 1.1 8,400 Showbox Oct 2019 box-office revenue 123.8 14.9 8,329 Oct 2019 revenue for top-five hits 102.8 12.1 8,488 4Q19 box-office revenue 465.8 55.9 8,329 4Q19 revenue for top-five hits 377.1 44.7 8,441 Sales: +5.4%y-y 4Q18 box-office revenue 441.9 52.3 8,450 Attendance: +7.0%y-y 4Q18 revenue for top-five hits 327.0 38.1 8,580 Source: KOFIC, NH I&S Research Center

Stake ownership structure

JoongAng Holdings

20.54% 33.32%

44.08% 100% 73.53%

JTBCCH Film Monster Megabox

100% 77.5% 30% 40% 40%

Perfect Storm BA Entertainment NPIO Entertainment How Pictures Contents Jieum

Note: JoongAng Ilbo owns a 5.4% stake in JTBC Contenthub Source: J Contentree, NH I&S Research Center

5 J Contentree www.nhqv.com

STATEMENT OF COMPREHENSIVE INCOME Valuation / Profitability / Stability (Wbn) 2018/12A 2019/12E 2020/12F 2021/12F 2018/12A 2019/12E 2020/12F 2021/12F Sales 511.3 560.0 645.5 680.7 Price/Earnings (x) 30.8 28.9 22.6 17.3 Growth (%) 21.7 9.5 15.3 5.5 Price/Book Value (x) 1.9 1.6 1.6 1.5 COGS 273.8 302.2 363.1 383.8 Price/Gross Cash Flow (x) 6.1 4.7 4.5 4.0 Gross Profit 237.5 257.8 282.4 296.9 Price/Sales (x) 1.1 1.0 1.0 0.9 Gross margin (%) 46.5 46.0 43.7 43.6 EV/EBITDA (x) 9.5 4.4 4.4 3.4 SG&A 202.7 205.2 217.2 213.4 EV/EBIT (x) 20.9 11.4 9.9 6.7 Operating Income 34.7 52.6 65.2 83.5 Fully diluted EPS (won) 1,448 1,335 1,926 2,520 Growth (%) 4.2 51.6 24.0 28.1 BVPS (won) 23,391 24,726 26,652 29,171 Operating margin (%) 6.8 9.4 10.1 12.3 Sales PS (won) 40,127 38,870 44,804 47,245 EBITDA 77.0 135.9 145.2 164.8 ROE (%) 7.4 5.5 7.5 9.0 Non-Operating Profit -1.2 -17.0 -3.9 -3.4 ROA (%) 3.4 3.4 4.2 5.3 Financial Income(Costs) -3.5 -6.6 -5.0 -5.0 ROIC (%) 7.9 11.9 9.3 11.9 Other Non-Operating Profit 2.4 -2.4 0.7 1.2 Dividend Yield (%) 0.0 0.0 0.0 0.0 Gains(Losses) in Associates, Subsidiaries and JVs -0.1 -8.0 0.4 0.4 Payout Ratio (%) 0.0 0.0 0.0 0.0 Pre-tax Profit from Cont. Op. 33.6 35.6 61.3 80.1 Total Cash Dividend (Wbn) 0.0 0.0 0.0 0.0 Income Taxes 8.0 2.5 13.5 17.6 Cash DPS (won) 0 0 0 0 Profit from Continuing Op. 25.6 33.1 47.8 62.5 Net debt(cash)/ equity (%) 0.3 -12.3 -20.3 -37.9 Net Profit 25.6 33.1 47.8 62.5 Debt/ equity (%) 95.1 145.6 127.3 113.0 Growth (%) 134.9 29.3 44.4 30.8 Interest-Bearing Debts (Wbn) 199.2 180.3 182.5 177.9 Net margin (%) 5.0 5.9 7.4 9.2 Current Ratio (%) 126.2 154.5 195.3 243.9 Net Profit of Parent 18.4 19.2 27.7 36.3 Total shares (mn) 14 14 14 14 Net Profit to Non-Controlling 7.1 13.9 20.0 26.2 Par value (won) 500 5,000 5,000 5,000 Other Comprehensive Income 4.3 0.0 0.0 0.0 Share price (won) 44,600 38,550 43,550 43,550 Total Comprehensive Income 29.9 33.1 47.8 62.5 Market Cap (Wbn) 642.5 555.4 627.4 627.4

STATEMENT OF FINANCIAL POSITION CASH FLOW STATEMENT (Wbn) 2018/12A 2019/12E 2020/12F 2021/12F (Wbn) 2018/12A 2019/12E 2020/12F 2021/12F Cash and Cash Equivalents 141.6 168.5 209.9 317.6 Operating Cash Flow 24.8 107.3 93.0 147.2 Accounts Receivables 77.1 69.4 69.4 69.4 Net Profit 25.6 33.1 47.8 62.5 Total Current Assets 342.1 389.7 448.1 555.8 Depreciation & Amortization 42.2 83.3 80.0 81.3 Tangible Assets 208.5 409.3 375.0 349.9 + Loss(Gains) from Subs 0.1 0.0 0.0 0.0 Investment Assets 82.2 117.0 100.5 80.0 + FC translation loss(profit) -0.2 0.0 0.0 0.0 Non-Current Assets 479.1 725.4 692.4 646.0 Gross Cash Flow 92.6 119.1 139.7 157.3 Assets 821.2 1,115 1,141 1,202 - Incr. (Decr.) in WC -53.5 -9.1 -34.8 3.4 Short-Term Debt 119.7 100.8 103.1 98.5 Investing Cash Flow -47.8 -100.8 -53.8 -34.9 Account Payables 15.1 15.1 17.4 20.4 + Decr. In Tangible Assets 0.4 0.0 0.0 0.0 Current Liabilities 271.1 252.2 229.5 227.9 - Incr. In Tangible Assets (capex) -28.8 -15.0 -15.0 -20.0 Long-Term Debt 102.6 381.8 381.8 381.8 + Disp.(Acq.) of Inv. Assets -0.9 -34.8 16.5 20.5 Long-Term Allowance 0.4 0.4 0.4 0.5 Free Cash Flow -4.0 92.3 78.0 127.2 Non-Current Liabilities 129.2 408.8 409.2 409.6 Net Cash Flow -23.0 6.5 39.2 112.3 Liabilities 400.3 661.0 638.7 637.5 Financing Cash Flow 115.2 260.4 2.2 -4.6 Capital Stock 72.0 72.0 72.0 72.0 Equity Financing 154.8 0.0 0.0 0.0 Capital Surplus 158.3 158.3 158.3 158.3 Debt Financing -39.6 260.4 2.2 -4.6 Retained Earnings 95.5 114.7 142.4 178.7 Incr.(Decr.) in Cash 92.2 26.9 41.4 107.7 Non-Controlling Interests Equity 83.9 97.8 117.9 144.1 Ending Cash and Cash Equivalents 141.6 168.5 209.9 317.6 Shareholders' Equity 420.9 454.0 501.8 564.3 Net Debt (Cash) 1.3 -55.7 -101.6 -214.0

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Rating and TP update J Contentree (036420.KS) Disparity ratio (%) Date Rating TP Avg Max/Min (won) Adjusted share price 2020.01.15 Buy W52,000(12M) - - 120,000 2019.08.08 Buy W59,000(12M) -37.4% -26.7% Targer pcir(12M) 100,000 1-for-10 reverse stock split 2018.11.06 Buy W6,900(12M) -28.2% -16.1% 80,000 2018.07.30 Buy W7,800(12M) -23.3% -9.4% 60,000 Covering analyst changed 40,000 2018.03.30 Buy W11,000(12M) -33.8% -23.0% 20,000 2018.01.23 Buy W7,500(12M) -2.0% 9.9% 0 2017.11.13 Buy W6,400(12M) -16.2% 0.3% '18.1 '18.5 '18.9 '19.1 '19.5 '19.9 '20.1

NH Investment & Securities stock ratings 1. Rating based on a stock’s forecasted absolute return over a period of 12 months from the date of publication.

l Buy: Greater than +15% l Hold: -15% to +15% l Sell: Less than -15% 2. Regarding listed companies under NH I&S’ coverage, our stock ratings break down as follows (as of Jan 10, 2020).

l NH I&S’ stock rating distribution Buy Hold Sell 74.9% 25.1% 0.0%

- The stock rating on an individual company can change at irregular intervals. Our stock rating distribution is calculated on a weekly basis.

Compliance notice

l NH I&S does not have a stake greater than or equal to 1% in J Contentree as of the preparation date. l NH I&S has not provided this material to any institutional investor or other third party in advance. l The analyst and his/her spouse do not own any securities of J Contentree as of the preparation date. l This report correctly reflects the analyst’s opinion and was written without any external influence or intervention.

Disclosures The research is based on current public information that NH I&S considers reliable, but NH I&S does not represent it as accurate or complete and it should not be relied on as such. Furthermore, the research does not take into account particular investment objectives, financial situations or individual client needs, and NH I&S is in no way legally responsible for future returns or loss of original capital. All materials in this report are the intellectual property of NH I&S. Copying, distributing, transmitting, transforming or lending of this material without NH I&S' consent is prohibited.